Cost and Benefits of Market Research for Product Development

This paper presents lessons derived from a study which explored conditions that make market research worthwhile for MFIs.As microfinance has moved from supply-led to demand-led solutions, MFIs have moved towards a market-driven approach. They invest resources in developing products and services that meet target market needs. Market research is the starting point in successful product development, but most MFIs fail to believe that market research benefits sufficiently outweigh its costs.MFIs incur both, financial and non-financial costs in the market research process. Market research benefits include better market understanding, enhanced image, internal skills building and mission fulfillment. Lessons learned on how to minimize costs and maximize market research benefits for product development include:

• Seek help from those with previous experience in conducting market research;
• Institutionalize capacity gained during research;
• Build designated and committed multiple research teams;
• Keep sample sizes manageable;
• Develop clear, focused objectives;
• Choose carefully, borrow, adapt and test research;
• Process research results daily.