Marketing financial services

The microfinance industry is developing rapidly around the world. With the spread of best practices, an increasing number of microfinance institutions are providing services with a clear orientation toward sustainability and profitability. As these institutions mature, their clients also mature, which has resulted in the pressure of increasingly sophisticated client demand. Increased competition also places pressure on microfinance institutions (MFIs) in many countries. This pressure provides MFIs with a strong incentive to retain their existing clientele and to identify new clientele in order to expand. MFIs often need to refine the financial products they offer to promote expansion. The combination of all these factors has increased the importance of marketing within microfinance institutions.

Marketing, seen as the holistic relation of an institution with the various markets it serves or would like to serve, has thus far been recognized as important by only a few MFIs. Interestingly, most MFIs initially focus on promotional activities, but few address all fundamental aspects of a marketing program. This study guide, which was written by Bankakademie in Germany and first published by GTZ with the title "Marketing for Microfinance Depositories", details the aspects of a comprehensive marketing program necessary for MFIs to become fully client-oriented. It provides practical examples of how to increase the level of sophistication of marketing programmes within microfinance institutions and cites examples from MFIs currently operating in Africa, Asia, the Caribbean and Latin America.

The lessons are accompanied by a case study, which follows a fictitious institution called MICROBANK through the development of a marketing plan for some new savings products. This case study illustrates how theoretical information can be applied in a practical situation. Throughout the case study, the reader is invited to answer questions and complete some practical exercises to increase his or her understanding. While these exercises can be done on an individual basis, marketing know-how is best acquired through discussion with fellow practitioners and this is strongly recommended to users of this material. Model answers for many of the questions are provided using the MICROBANK example but it must be remembered that marketing is not an exact science and different viewpoints can provide differing but nevertheless, successful solutions to the same problem.

The video “Little Money, Big Vision”, which can be watched here in the RFLC, is designed to accompany this guide.

Resources

resource title type year resource
Case Study and Exercises Case Study 2000
This resource appears in: Marketing financial services

After completing the lessons in this study guide which provide the theoretical grounding and empirical evidence from various MFIs about developing marketing plans for financial services, you can practice transferring the principles learned to a real life situation by working through this case study. The case study features MICROBANK, a financial institution which has provided loans to rural and urban low income segments of the population for eight years. It is an institution licensed as financial intermediary by the central bank of the country under a specific law governing small financial institutions. After two years of operation under this law, management now plans to introduce a savings product in order to diversify the financing sources.

Throughout the case study you are invited to stop and answer questions or apply the ideas to your own institution.

It should be noted that the text in this case study has undergone significant editing since its original publication.

Author Bankakademie (edited by J.Heney)
Publisher GTZ
Number of Pages 50 pp.
Region / Country Global
Lesson 1: Marketing Challenges for Financial Services Lesson 2000
This resource appears in: Marketing financial services

The objective of this lesson is to introduce the basics of marketing, particularly the concepts of market information and marketing management, and to explain the particular challenges of applying those concepts to financial services. The final section highlights the special challenges of marketing financial services for the poor.

Author Bankakademie
Region / Country Global
Lesson 2: Strategic Marketing Lesson 2000
This resource appears in: Marketing financial services

Strategic marketing is the basis for operational marketing decisions and involves making long-term decisions about the overall direction that an MFI should take in serving client markets. This lesson explains how a company's mission statement and objectives provide the overall framework for strategic marketing decisions and corporate identity defines an institution's unique position in the financial market. The final section explains the need to conduct ongoing analysis of the market environment through market research.

Author Bankakademie
Region / Country Global
Lesson 3: Strategic Planning Lesson 2000
This resource appears in: Marketing financial services

The objective of this lesson is to introduce the logic of market segmentation and explain how strategic and operational planning are the basis for deciding on the appropriate marketing mix for an MFI and determining its strategic marketing position.

Author Bankakademie
Region / Country Global
Lesson 4: Operational Marketing 1: Product Policy Lesson 2000
This resource appears in: Marketing financial services

Once strategic and annual marketing plans have been developed, MFIs must determine the marketing mix necessary to achieve the goals set forth in their plans. The marketing mix is a combination of four inter-related elements: products, prices, distribution and promotion. This lesson deals with the first of these – product policy.

Region / Country Global
Lesson 5: Operational Marketing 2: Pricing Policy Lesson 2000
This resource appears in: Marketing financial services

In the process of developing a marketing mix to reach target markets and achieve marketing goals, once an MFI has developed their products, they must determine their pricing policy. This lesson covers the three major tasks in pricing:

  • Setting pricing objectives.
  • Setting the base price for their products, consistent with their pricing objectives.
  • Selecting which strategies, such as discounting, to employ in modifying and applying the base price.
Region / Country Global
Lesson 6: Operational Marketing 3: Distribution Policy Lesson 2000
This resource appears in: Marketing financial services

Distribution, or sales, policy concerns the channels selected to transfer ownership and transport a product from its producer to its consumer. In financial services, distribution policy concerns the points of sale selected for collecting deposits, granting loans and distributing other financial services. This lesson looks at the factors to consider when selecting distribution channels and distribution intensity.

Author Bankakademie
Region / Country Global
Lesson 7: Operational Marketing 4: Promotion Policy Lesson 2000
This resource appears in: Marketing financial services

Once an MFI has determined their product, price and distribution policies, they need to turn their attention to promotion, the last of the marketing-mix elements necessary to reach their target market and achieve their marketing goals. This lesson examines the five main promotional methods – personal sales, advertising, sales promotion, publicity and sponsoring.

Author Bankakademie
Region / Country Global
Lesson 8: Implementation Lesson 2000
This resource appears in: Marketing financial services

Implementation is the stage during which an MFI attempts to carry out its operational plan. This lesson outlines the key elements of the implementation process, including the crucial element of evaluation and feedback which help to ensure the organization remains on track and achieves the objectives it set in its strategic planning.

Author Bankakademie
Region / Country Global

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