Microfinance Channel

Knowledge Center

   

Description of Microfinance Channel. Explanation.

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print
 
Microfinance Channel

Definition Microfinance Channel. Description.


A Microfinance Channel is a new distribution channel that has been created after the raise of Microfinance. See also: Channel Management.


Once Microfinance Institutions had established their capillary network in certain regions, they became aware of their direct contact with thousands of people representing homogenous purchasing attitudes and needs. Leveraging their huge base of borrowers, many Microfinance Institutions decided to expand their product lines and extend them to basically any type of product that could accommodate a typical Bottom of the Pyramid customer.

The challenge for these institutions is being able in the coming years to deliver products that can range from soaps, to clothes, consumer electronics, insurance, and so on. The outcome of such ongoing process is the creation of a new distribution channel particularly suited for poor households, what it is known as the Microfinance Channel.


Considering that market access and distribution is a main limitation of doing business with the base of the pyramid, microfinance institutes, through their agents that visit customers everyday, constitute a breakthrough direct channel able to reach this segment.


Microfinance Channel Strategies

Key strategies in order to be successful in serving these type of customers are:

  1. Standardize business processes and products. Following the model of giants, like McDonalds’s, to distribute at the base of the pyramid it is necessary to create simple and standard products that fit all, and make use of latest technology to reduce any time consuming manual work.
  2. Exploit Economies of Scale. The base of the pyramid is made of a huge numbers of price sensitive individuals with homogenous needs: adopt a Cost Leadership Strategy to manage big customers portfolios and offer always the best price on the market.
  3. Focus on Customer Loyalty. More than any other type of customers, those at the base of the pyramid live often in small local communities where Word of Mouth can have strong effects (positive and negative). By listening to customers needs, working aside them and scaling up their loyalty, the viral effect of a positive word-of-mouth will serve as an automated free marketing campaign. Since the Microfinance Channel products and services make large use of loans, only a deep customer loyalty is a viable route to obtain high repayment rate and keep the business profitable.

Microfinance Channel Forum
  Cases of using a Microfinance Channel. Examples
Hi, do you know of a remarkable case or a famous example in which a microfinance channel approach was used succesfully?
Please share it so other people may benefit... Thanks for contributing!...
     
 

Microfinance Channel Special Interest Group


Special Interest Group

 

Best Practices - Microfinance Channel Premium

Expert Tips - Microfinance Channel Premium

Resources - Microfinance Channel Premium
 

News

Microfinance Channel
     
 

Videos

Microfinance Channel
     
 

Presentations

Microfinance Channel
     
 

More

Microfinance Channel
     

Compare with: Microfinance  |  Microinsurance  |  Multi Channel Marketing  |  Blue Ocean Strategy  |  Bricks and Clicks

Special Interest Group Leader

You here


 

Return to Management Hub: Ethics & Responsibility  |  Finance & Investing  |  Marketing  |  Supply Chain & Quality


More on Management  |  Return to Management Dictionary  | 

 

This ends our Microfinance Channel summary and forum.

About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2016 12manage - The Executive Fast Track. V14.1 - Last updated: 1-10-2016. All names tm by their owners.