Key Questions that Should Precede New Product Development

This paper identifies six issues that MFIs need to address prior to starting new product development:

• Motivation: What has been the motivation for the new product development?
  • MFIs should ideally be motivated by the desire to become more client-driven.
• Commitment: Are the MFIs adopting product development as a process?
  • MFIs should follow a systematic approach with adequate market research, pilot-testing and planned roll-out of the new product.
• Capacity: Can MFIs handle the strains and stresses of introducing a new product?
  • MFIs should conduct a thorough institutional analysis, review strategy, financial viability, organizational structure, marketing and systems.
• Cost effectiveness and profitability: Do MFIs fully understand the cost structure of their products?
  • MFIs need to understand exactly how much each part of their operations costs to facilitate informed management decisions.
• Simplicity: Can existing product(s) be refined, repackaged and re-launched before developing a new one?
  • MFIs should carefully consider options for refining, repackaging or re-launching their existing products to save money and time.
• Complexity and cannibalization: Are MFIs falling into the product proliferation trap?
  • MFIs should recognize that they cannot design a product to respond to each and every individual specific need;
  • They should group the most common and prevalent needs and develop products accordingly.

Finally, the paper highlights the importance of product development in making MFIs market-responsive. The more client-responsive products:

• Reduction in drop-outs;
• Attraction of new clients;
• Contribution of the long-term sustainability of the MFI.