Costs and Benefits of Market Research and Pilot Testing for New Product Development in Microfinance

This paper examines the hypothesis and results recorded by MFIs that have chosen to incorporate market research and pilot testing as the first two steps as part of their new product development processes. MFIs found that incorporating these two steps in the new product development process helps them manage risk more effectively, avoid product failure, and launch more viable products that were attractive and profitable to the institution and to the market.The paper finds that the costs of incorporating market research and pilot testing are worth the benefits generated. Two of the main strategies for lowering the cost of a systematic, market-led approach to new product development are:

• Reducing the scale of the research or testing, by reducing the sample size, the number of locations, the length of the discussion, the number of tools applied, or the duration of the test; and
• Narrowing the focus of the research or testing through clearly defined research objectives and pilot test targets.