Foundation Assignment Printed

8/7/2019 Foundation Assignment Printed

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MicroN-FINANCE

Prepared by

Group DAGS

K.B.M.G.K.B. Senavirathne Reg.No:D101S41-2

S.D.D.S Rajapaksha Reg.No:D101R15-2

D.A Sanath Reg.No:D101S44-2

A. Kodithuwakku Reg.No:PDM/D08/K012

Integrated Assignment

June 2010 Examination

Certificate in marketing

SRI LANKA INSTITUTE OF MARKETING


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Acknowledgement

We wish to extend heart-felt gratitude to our all lecturers for their advice and

guidance given to us during this assignment and in making this success.

We wish to extend our sincere gratitude to all our colleagues for their encouraging

support extend towards us. And we would like to thank SLIM staff members for

their maximum support to success.


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Table of Contents

Acknowledgement ................................ ................................ ................................ ......... 1

1. Executive summary ................................ ................................ ................................ 3

2. Introduction ................................ ................................ ................................ ........... 4

3. Micro finance in Sri Lanka ................................ ................................ .................... 5

4. Task-1 ................................ ................................ ................................ ..................... 6

4.1. Business sectors for MicroN ................................ ................................ ........... 6

4.2. STP for paddy, small garments, and handy craft industry .......................... 10

5. Task-2 ................................ ................................ ................................ ....................11

5.1. Marketing plan for micron ................................ ................................ ............11

5.2. Current status of micron ................................ ................................ ...............12

5.3 MicroN Objectives ................................ ................................ .....................14

5.4 Strategies ................................ ................................ ................................ ........14

5.5 Marketing activity plan................................ ................................ ..................185.6 Marketing implementation and controlling process ................................ .....19

6. Task -3 ................................ ................................ ................................ ...................20

6.1. Recovery process ................................ ................................ ............................20

6.2. Recovery process for total outstanding ................................ ......................... 20

6.3. Recovery process for newly disburse loans ................................ ...................21

6.4. For a better implementation and for better controlling process ..................22

7. Task -4 ................................ ................................ ................................ ...................24

7.1. Communication plan for MicroN ................................ ................................ ..24

7.2. Communication audit ................................ ................................ ....................25

7.3. Communication goals and objectives ................................ ............................26

7.4. Communication strategies ................................ ................................ .............27

7.5. Communication activity plan................................ ................................ .........28

8. List of References ................................ ................................ ................................ ..29


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1. Executive summary

MicroN is a small finance institute which provides microfinance facility for various

business entities. They have been in operation for seven years in the market and MicroN

has ten branches island wide. Credit, recoveries are their main operations and so far their

lending amount up to 60 millions.

As institutional inefficiencies, poor repayment, poor regulations of the company,

internal communication problems MicronN currently in a financially unstable situation.

We are going to re orient the MicroN to a sustainable growth.

The MicroN focus new booming business sectors, which are paddy cultivation, handy

craft manufacturing, and small garment producing industries. By introducing deposits and

savings as DIRIYA SUREKUM and lending as DIRIYA SAHANA MicroN is going

to step in to the market in a new way. And also systematic recovery process and a much

better communication methodology introduced.

Micro finance is a very potent instrument of poverty alleviation especially in country

like Sri Lanka. And also the demand for microfinance is increasing. So the micro finance

industry should be up lifted and the quality of the service should be improved. Sound

regulatory and supervisory frame work, broad and innovative product range, and strong

customer protection safe guards helps to the sustainability of the microfinance industry.


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2. Introduction

MicroN is a finance company which is providing micro finance facility for various

business entities. They have been engage in their operations in the micro finance market

for 7 years, covering small areas in Rathnapura, Avissawella, Panadura, Kaluthara,

Ambalangoda, Galle, Monaragala, Ambilipitiya, Maharagama, and Mahiyangana.

MicroN branch situated in Panadura also running as their head office and the other

branches headed by the branch managers. Each branch consists of two sales officers, one

recovery officer, cashier and an office assistant. All the branches fully equipped and

linked to the head office. MicroN is registered under the monitory board of central

bank. So that at present they are maintaining deposits & savings, and lending as their

operations.

As poor regulations and supervising, institutional inefficiencies, poor repayment of the

customers, unfavorable economic environment, currently the McroN is in a financially

unstable situation. So we are going to reorient the micron towards a sustainable growth by

applying marketing theories in to the MicroN.


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3. Micro finance in Sri LankaMicro finance is the provision of financial services to low income clients, including

consumers and the self employed, household based entrepreneurs who traditionally lack

access to banking and related services. Micro finance has a long history in Sri Lanka.State owned development banks, credit unions and other financial cooperative societies,

cooperative rural banks, regional development banks, commercial banks that specialize in

microfinance and as well as most of the NGOs and most of the finance companies offer

micro finance facilities in Sri Lanka.

Microfinance is a very potent instrument of poverty alleviation. Good microfinance

system offer a wide range of products including, products specially tailored for the needs

of poor. These products are saving, loan, payment services, insurance, leasing. These

products should be offered at cost which is low as possible but still allows the financial

institution remaining profitable and substantial.

Good financial sector is one where access to financial services is available to all

segment of the society not only to certain groups such as wealthy and big businesses. But

here in Sri Lanka most micro finance institutions are facing some problems at present.

The core problem is the poor quality of the microfinance services offered, indicated by

insufficient outreach, low repayment, low cost efficiency and financial products which

are not client driven. And also poor regulations and supervision of deposit takings,

limited management capacities, and institutional inefficiencies seriously threatens the

sustainability of the offered financial services and their outreach to poorer households,

micro and small enterprises.

So, there must be many conditions to develop a good micro financial service. These

include sound regulatory and supervisory frame work, broad and innovative product

range, and strong customer protection safe guards.


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4. Task-14.1.Business sectors for MicroN

According to the current situation of micron, we selected following business sectors to

be focused by micron using existing resources.

y Paddy cultivation

y Small scale garment producers

y Handy craft producers

To analyze the above three business sectors we use SWOT analysis tool and

segmentation, targeting, positioning strategy tool.

The SWOT analysis is an extremely useful tool for understanding & decision-making

for all sorts of situation in business and organizations SWOT is an acronym for strengths,

weakness, opportunities, threats use SWOT analysis for business planning, strategic

planning, competitor evaluation, marketing business and product development and

research reports.

A SWOT Analysis is a specific type of situation analysis designed to gauge the

competitiveness of a company given its limitations. The strengths and weaknesses are

usually thought of as internal to the company and the opportunities and threats are usually

thought of as external to the company.


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a. SWOT analysis for paddy cultivation

Strength

y High consumption of rice as a main

meal

y Developing market

y Demand

y climatic condition

y Resources

y Food habits

y Seasonal demand

y Easy process

y High growing rate

Weaknesses

y Low educational background

y Traditional attitudes

y Importing of rice

Opportunities

y High consumption

y Developing market for rice and rice

related products

y Easily accessible

y Existing resources

y Unemployment

y Knowledge

y Government involvement(fertilizer

subsidy, govi samithi, )

y Private sector involvement(CIC,

BAURS)

Threats

y Substitute

y Natural disasters

y Climatic condition

y Cultural believes

y Increasing of prices in chemicals,

fertilizers


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b. SWOT analysis for small garment producing industry

Strength

y Basic need

y Huge market

y Low cost materials

y International reputation

y Seasonally high sales

y Easy selling process

y In-house concept

y High profit margins

Weaknesses

y Unskilled labors

y Using of poor technology

y Low quality production

Opportunities

y Potential market

y Arrivals of new fashion

y Unemployment

y High demand

y Business can be started with

limited resources

y Low investment needed for

start the business

y Need low man power

Threats

y Government taxes

y High competition

y Fashion change

y Price changes


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c. SWOT analysis for handy craft

Strengths

y Highly profitable

y Self employment

y Availability of resources (e.g.-

wood, brass )

y Traditional techniques

y Demand for traditional item

Weaknesses

y Need of special ability

y Less reputation

y More number of intermediaries

Opportunities

y Development of tourism industry

y International recognition for Sri

Lankan handy craft

y Government support

y Easy entrance

y Trend for handy craft

Threats

y Handy craft importers

y Large scale handy craft

manufacturers

y Expenses for raw materials


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5. Task-25.1.Marketing plan for micron

Planning is an important aspect in business management. Behind the corporate

objectives, which in themselves offer the main context for the marketing plan, will lie the

"corporate mission," which in turn provides the context for these corporate objectives. In

a sales-oriented organization, the marketing planning function designs incentive pay plans

to not only motivate and reward frontline staff fairly but also to align marketing activities

with corporate mission.

Expectation of marketing plan

y Setting objective for growth and for future

y Identification of potential and new market

y To avoid and prepare for competitor attack

y To achieve competitive advantages

y To have an understanding about the changing environment

y To face the future challenges

y To survive in a challenging market

y Build brand image


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5.2.Current status of microna. Internal audit

Strength

y 10 branches

y Trained staff

y Existing customer base

y 7 years in operation

y Awareness among the people

y Registered under the monitory

board

Weaknesses

y Poor recovery

y Lethargic staff

y Internal communication problems

y Bad reputation

y Financial instability

y Insufficient outreach

y Poor attitude among the staff

y Poor management

y Institutional inefficiencies

Opportunities

y High profit margins

y Easy to develop the customers

y Simple process

y Simple evaluation

y

Threats

y Competitors

y Competitors promotions

y Recovery problems

y Low repayments

y

b. PESTEEL analysis

Political

y Gemi diriya concept

Samurdi concept

Sanasa

y Privatization

y Country stability

y NGO operation


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Economical

y Income distribution

10% to 20% population has 60% to 70% of the wealth

y Saving habits

Is not in a position

y Inflation

High inflation rate in Sri Lanka

y Better policies in Sri Lanka

y Interest rates in Sri Lanka

Should be low and stable. If interest rates are low, more investments will be there

y Tax policies

y Growing of GDP

Social and cultural

y Attitudes towards the credit

Low attitudes towards the credit is a disadvantage for microfinance

y Attitude towards the working women

Technological

y

Industry specific technologyy Use of simple technology

Ecological

y We can use wastage as resources

y Environmental friendly

y Health concern products

y Organic food

Legal

y Comparatively there are less legal influence

y Legal stability of the company

y There should be a systemic legal procedure


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5.3 MicroN Objectives

y 100 million deposits/savings within 3 years

o 1st

year 20 millions

o 2nd year 35 millions

o 3rd year 45 millions

y 100 million lending within 3years

o 1st year 20 millions

o 2nd year 35 millions

o 3rd

year 45 millions

y 100% recoveries within 3 years

o 1st year 50% recoveries

o 2ndyear 30% recoveries

o 3rd

year 20% recoveries

y Building the brand image and opening another 3 branches within 3 years

5.4Strategies

In here we are going to use overall marketing strategy. We have decided to describe the

strategies by means of Ansoffs concept in order to achieving high growth of market

share.

5.4.1 Ansoff matrix

According to the Ansoff theory we are going to introduce a current available product to

the current market as illustrated by the following diagram as to how the growth of a

current market takes place. Introducing current product to the current market we get

opportunity to introduce our new steps and build a good perception among them


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Market

Penetration

5.4.2 Our products

Micron is there in the market for 7years.At present micron operations are not in a

systematical path. But they are maintaining deposits, lending, and recoveries. As the

lending and deposits are main parts in micro finance, we also need to concentrate more on

these areas. To do that we rename our existing products to attract more clients. Here we

renamed savings & deposits asDIRIYA SUREKUM and, lending as DIRIYA

SAHANA

a) DIRIYA SUREKUM

o Savings account

o Higher interest rates compare with the other microfinance institutes

o Depositor must be a group member to open a savings account

b) DIRIYA SAHANA

For all 3 business sectors lending goes as DIRIYA SAHANA

DIRIYA SAHANA for paddy cultivation

o Loan duration- 6 months

o Maximum loan amount per acre- Rs 20,000.00

o Maximum loan amount per person Rs 100,000.00

Market

P

r

o

d

u

ct

NewExisting

Existing

New


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o Loan repayment- we take the interest of 1st

installment before issuing

The loan and balance interest installment on every fortnights.

o Capital of the loan must be paid after harvesting.

o Entitlement for applying loan- customer should be member of the

group and maintain savings account at least 3 months.

DIRIYA SAHANA for small garment producers and handy craft industry

o Loan duration -6 months

o Maximum loan amount per person rs 25,000.00

o Loan repayment- installment should be paid fortnights(interest+capital)

o Entitlement for applying loan- customer should be member of the

group and maintain savings account at least 3 months.

5.4.3 Price

Though there are products to be sold there should be a price. In here price is the interest

rates that we are taking from lending and our interest rates on deposits. As there are so

many competitors in this sector such as samurdi, sanasa, sarwodaya, NGOs and banks

we select the customer oriented pricing strategy. There we use penetrating strategy. By

setting penetrating strategy we will be able to develop the market share as well.

5.4.4 Distribution

We are having only 10 branches covering limited areas. So we select selective

distribution by using our own sales staff.

5.4.5 Promotion

This area is also plays a vital role to attract more customers. Here we target our

customers by carrying out advertising door to door promotion. We use book lets, leaflets,

banners, radio commercials, group awareness programs etc. and we convey a strong

message to the public.


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5.4.6 People and physical evidence

These elements are also most important factors. People play a major role in service

market. We must select the right person to right place. And they should be well trained.

Also we should make friendly environment to attract more customers within the office

area.

5.4.7 Process

As we deal with poor, low income people our process should be simple, neat and a not

complex one. Otherwise this poor people will get in to more trouble.

For taking deposits from the clients, we are going to implement group deposit taking

method. Firstly we form small groups in the area. A group consists of maximum 5 people.

For lending we are going to implement same group lending process. It is more

convenient for us and also to the customers. Less documentation is using. Micron staff

assist the customers to overcome the problems arises when applying for loans. Our sales

staff visits the areas and taking deposits. And for recoveries, recovery officers will be

appointed. He is responsible for recovering. Cashier, loan officer and sales staff should

assist the recovery officer.

All the above activities will help to overcome the problems facing micron at this

moment. And there past recoveries also can be done at the same time.


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5.5Marketing activity plan

Activity Responsible

person

Jan

Feb

March

April

May

June

July

Aug

Sep

Oct

Nov

Dec

Preparing

budget

Marketing

manager

Area

demacation

For field

staff

Marketing

manager

Sales reviwe

meetings

Marketing

manager

Revising

budget

Marketing

manager

Monitoring

field staff

activities

Branch

manager

Promotional

programs

Marketing

manager

Developing

new

customers

Marketing

manager

Monitoring

Competitor

Activities

Marketing

manager


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5.6Marketing implementation and controlling process

a) Lending and recovery process

o Sales officer visit the areas and select business sectors to lend money

o Small group formation according to the business sectors and areas(max 5

person in a group)

o Meet village head man and ask his assistant to form groups

o Select a chairperson and a treasurer within the small group

o Lend money to individuals in the group under the supervision of

chairperson and village head man

o Loan officer supervising the activities of clients

o Loan officer help the clients to overcome the problems

o Arrange fortnight meetings to conduct repayments

o Closely associate with clients. This will help for higher collection rate.

o Linking expert organization with the clients to improve the product

quality, (e.g.-CIC, Agriculture dept., Baurs)

o Involves organizing trade fairs to market the products manufactured by the

clients

o Organize training for business and handling cash for clients

o Introducing insurance scheme for clients


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6. Task -36.1. Recovery process

Micron has been there in the market for 7 years and up to now their lending amount is

about 60 million. As poor regulation and supervising, institutional inefficiencies, low

repayment of the customers, micron is not in a good position to recover their outstanding

amount. In this task we are going to discuss how they should act as a team and a proper

process to recovering that outstanding amount.

y Micron objective is recovering 100% of the outstanding within 3 years.

o 1st year 50% recoveries

o 2nd year 30% recoveries

o 3rd

year 20% recoveries

6.2. Recovery process for total outstanding

For the last 7 years micron has given 60 millions as micro loans. And our main

objective is recovering all the outstanding. There should be a proper process to recover

them. This process involves following steps.

y Caring out a research to identify the reasons for bad repayment

o Searching past recovery schedule and evaluate.

o Getting information from the office staff.

o Selecting the random sample within the outstanding customers and call

them.

o Random visits for outstanding customers.

y All staff members should be motivated for the recovery process. Even the cashier,

peon.

y Prepare a proper database for existing outstanding.

y Held one day workshop for all staff members.

y Arrange weekly meetings to staff members for recovery purpose.

y Sending reminders to outstanding clients.

y A recovery officer should be appointed for each branch. We suggest recruiting a

recovery officer from the responding area.


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Recovery schedule

Customer

Name &

loan amount

Loan

disbursed

date

Outstanding

amount

No of rentals

In areas

Last paid

date

remarks

Sanjeewa

20,000.00

25/02/2005 17,000.00 20 20/04/2005 bad

y Then we categorize the client according to the outstanding amount/frequency of

settlement/past performance.

y Prepare itinerary/monthly target for recovery officer. According to the itinerary

recovery officer should visit the client and push the to repay.

y Arrange recovery centers in the corresponding area and meetings every fortnight.

y Arrange legal action process for bad customers. e.g.- samatha mandala, court.

6.3. Recovery process for newly disburse loans

For newly disburse loan, micron has to implement a better recovery process. Firstly

they should follow up loans. They should closely monitor the clients, what are they

doing and, on what purpose they spend their money. Follow up on loan involves several

steps.

y Continuous follow up the small groups by loan officer.

y Weekly follow up the clusters consist of small groups by loan officer.

y Monthly by the recovery officer through financial information of micron.

y Clarify to group members about overdue loan repayment and their disadvantage.

y Follow up properly to maintain a loan recovery rate at 100% by micron

a. Recovering loans

Loan recoveries can be done as follows.

y By installments.

y At the end of the harvesting in the agricultural sector.


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b. Loan recoveries by installments.

y Loan installment can be collected weekly, monthly, quarterly, by the recovery

officer according to the agreement made by clients and micron when they giving

the loan. To achieve higher collection rate micron can conduct fortnight meetings

with the clients in the corresponding areas. Loan officer and the recovery officer

should participate for this event.

c. Loan recoveries at the end of the harvest

y Agricultural loan could be paid back at the end of the harvest. Normally in paddy

cultivation the grace period is 6 months. At the end of grace period full loan

amount should be paid back. But interest amount for the loan should be paid every

month.

6.4. For a better implementation and for better controlling process

y Group formation

This takes place after a meeting with the Village Headman who is consulted before

we start working in an area. Not only is his permission sought but he also helps select

the members who will form the group. In each group, a chairman, and treasurer,

appointed.

y Training for business and handling cash

A total of 6 training sessions that usually takes 6 weeks to complete prepares the

group for running a business day to day. During this time, each member will decide

on a business area and formulate a business plan.


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y Loans disbursed

When the loan officer is satisfied that the group is ready; each member of the group

receives an individual loan. They are collectively responsible for paying back the

loan in fortnightly installments. It is also a requirement that a certain percentage goes

into their savings account which they can withdraw as they wish. The rest of the

money is profit to reinvest in their business or to spend on their homes and families.

y Businesses are started by group members

The typical businesses that we support include selling household provisions,

clothes, food and drink, running grocery stores and small restaurants. Some clients

have diversified their business because of the wet/dry season affecting supplies of

certain goods

y Fortnightly meetings to conduct repayments

The chairperson opens the meeting, usually with a prayer, and the treasurer is

responsible for collecting and counting the money from the group. Treasurer and one

other group member will then make a trip to the bank to pay in the money, depositing

the receipt at their local Micro Loan Foundation branch office.

The loan officer is there to supervise, offer advice and verify the amount that is being

repaid although he/she does not conduct the meeting. When business is not going

well or members fall behind with repayments for other reasons, it is the loan officers

responsibility to help get things back on track.

y Clients can apply for larger loans to help their businesses grow

The loan cycle ends when the total amount has been repaid by the group, normally

after six months. Many clients start to employ others to help run their business

including their husbands who in our experience are very willing to become involved.

Over time, businesses grow, profits increase and the poverty cycle is broken.


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7. Task -47.1.Communication plan for MicroN

Marketing communication

Marketing communication (or marcom) consists of the massages and related media

used to communicate with a market.

Communication model

Responsive hierarchy models attempts to predict the sequence of mental stages. That a

consumer passes through on the way to a purchase. These models are useful in the sense

that they attempt to prioritize the communication objectives in various stages of the

buying process.

y AIDA model

Gaining the customer (Awareness)

Generating the customer (Interest)

Stimulating the customer (Desire)

Causing the customer to take (Action)

Image analysis of MicroN

Lesstrustworthiness

High awareness

Low awareness

Sanasa,sarwodaya

MicroN

Hightrustworthiness


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7.2.Communication audit

SWOT analysis

Strength

y Existing for 7 years

y Existing customer base

y Well developed system network

among the branches

y Advance communication facilities

(telephone, fax,)

Weaknesses

y Internal communication problem

y Lethargic staff

y Less public relations

y Less usage of communication

facilities

y Less knowledge about the MicroN

y Poor communication among the

staff

y Negative image about the company

Opportunities

y Possibility of low cost promotion

y

Word of mouthy Development of Microfinance

industry

Threats

y Strong competitor promotions

y

Low financial strengthy Less availability of communication

channels


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7.3.Communication goals and objectivesa. MicroN vision & Mission

Be the best service provider in microfinance.

b. MicroN mission

Develop the financial stability of low income people by protecting the Sri Lankan

culture.

c. MicroN objectives

y Create a brand awareness about the MicroN

y Introduce and develop a CSR program to MicroN within 3 years

y Develop internal communication program to enhance the quality of the staff by 1

year

d. Positioning statement of MicroN

BEST HELPING HAND MICRON

e. Key message

High quality financial service with trustworthiness to your door step on time

f. Key audiences

y Low income clients who do not access to formal institutions

y All MicroN staff members


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7.5.Communication activity plan

Activity Responsi

ble

person Budget

Jan

Feb

March

April

May

June

July

Aug

Sep

Oct

Nov

Dec

Radio

Advertisin

g Marketing

manager

500,0

00

News

Paper

Advertisin

g Marketin

g

manager

500,0

00

Leaflets

&

Broacher

Printing Marketing

manager

400,0

00

Banners

&

Outdoor

Promotion

s Marketing

manager

400,0

00

Sponsorsh

ips

Marketing

manager

250,0

00

Awarenes

s

ProgramsMarketing

manag

er

150,000

Other

Activities

Marketing

manager

100,0

00


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8. List of References

y Kotler Phillip & Keller Kevin Lane, Marketing Management, 11th Edition,

Prentice Hall of India(2003)

y National Business Research Institute website.

y SLIM Text Books and Lecturer Notes

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