1. Session 5. Developing the Product Concept 1.Product Cycle 2.Evaluating Existing Products 3.The Process 4.The “8” Ps 5.Different Products for Different Needs 6.Developing Product Prototype Time: 3 Hours

2. 1. Product Cycle Launch - Product is developed & presented to market. New consumers/users. Growth - Product grow, gain market share. New market segments Maturity - Products market share peaks. New market niche filled. Decay - Product loses market share and becomes obsolete - Redesign (Update/repackage/add options; improve product delivery); discontinue; develop new product

3. 1. Product Cycle - DECAY Some options to take for a product under decay: 1)Redesign. a. Update & repackage. Done without changing the main core or feature (such as, a new passbook design cover to make it appealing to new and existing clients; raffle prizes) b. Add options. (such as checking account with interest; savings with no witholding taxes, etc) c. Improve product delivery - Ex. Train staff; improve bank premises and building design.

4. 1. Product Cycle - DECAY Some options to take for a product under decay: 2) Discontinue product - option must be based on the product’s performance, whether it has reached its obsolescence stage. 3) Develop a new product - option can be costly; takes time and effort to introduce and market one.

5. 2. Evaluating Existing Product Session 5 Group Activity 1.Analyze your bank’s existing deposit products using the guide questions in Session 5 Handout 1. 2.Categorize the cycle the product is currently in. 3.Indicate options for each of the product.

6. 2. Evaluating…Guide Questions Does our product meet the needs of the market? Is our product up to date ? When was the last time we evaluated and/or modified it? Is it attractive to existing clients? Is it attractive to the broader market of potential clients? Is it profitable? Does it match or outperform products of the competitors? In sum, what product cycle is our product in? Session 5 Handout 1

7. 3.Process for Developing the Product Concept Form a team of 6-10 persons to be involved in the concept development process For a range of perspectives & understanding of issues, include: –Front-line staff (branch manager; field or credit officers) –Marketing staff (those involved in implementing market research) –Finance staff –Management Information Systems staff –Operations staff

8. Develop the product concept: brain-storming sessions; discuss results of the market research; Then, structure these ideas for further analysis. 3.Process for Developing the Product Concept (cont.)

9. 4. Guide on Developing the Product Concept: “8 Ps” Product (design) – Includes the specific product features. Price – Includes the interest rate, withdrawal costs Promotion Place – Refers to distribution and making sure that the product/service is available where and when it is wanted.

10. Positioning – Refers to the effort by the bank to occupy a distinct competitive position in the mind of the target customers. Physical Evidence – Includes the presentation of the product. People – Includes how the clients are treated by the people involved in delivering the product. Process – Includes the way or system in which or through which the product is delivered. 4. Guide on Developing the Product Concept: “8 Ps”

11. 5. Different Products for Different Needs A.Regular Savings Products B. Semi-Restricted Savings Products C. Time Deposits

12. 5.A Regular Savings For Clients Withdrawability (easy access) and service are the most important More useful for those who need ready access for, say, business opportunities, emergencies

13. 5.A Regular Savings…cont. For the bank Generally more stable than larger accounts Administrative costs tend to be higher for smaller accounts

14. 5.B Semi-restricted Accounts Convenience and level of service Attractive for those used to the “paluwagan” or who save for particular purposes, such as education

15. 5.B Semi-restricted Accounts..cont. Generally attracts larger savings balances than regular saving Simple for clients to understand but can be more complicated to set-up and monitor

16. 5.C Time Deposits For Clients Return or interest rate is most important Generally attractive for those with longer-term horizons: retirement, purchase of land, or house

17. 5.C Time Deposits…cont. For the bank Administrative costs are lowest of all three products and easier to manage Financial costs are much higher Accounts are more difficult to attract (due to competition with bigger banks) Risk of ‘hot’ or ‘laundered money’

18. 6.Factors to Consider in … Designing Regular Savings Access is the most important –hours of service –number of tellers (dedicated to savers) –24-hour ATM; deposit-withdraw at any branch Trademark to distinguish the product from others – “Ganansya Box Savers”, “Happy Future Savers,” “Students Savers” Scaled interest rates for higher balances Operations and Procedures manual Staff training

19. Easy to understand products If regular contributions are required, there is the need for dedicated tellers/collectors Trademark is important - ‘Partner Savings Plan’, ‘Save for Christmas’, ‘Save for School’; “Save for Hadj” Changes to MIS to facilitate more transactions Operations and Procedures Manual Staff training 6.Factors to Consider in … Designing Semi-Restricted Accounts

20. Interest rate is key - need to monitor the competition Client’s generally have more banking experience Need to be flexible and adjust interest rates regularly Operations and Procedures Manual Staff training 6.Factors to Consider in … Designing Time Deposits

21. 7. Developing Product Prototype Workshop 1.Group activity for brainstorming on a new product or improvement of an existing one 2.Use Brainstorming Guide (Session 5 Handout 2) 3.The output from the session can be a take off point for further discussion in the bank.

22. Designing Savings Product(s): Brainstorming Guide (Session 5 Handout 2) 1. Why design ________ savings product? What market opportunities for deposits can the bank try to serve? 2. What are the bank’s objectives for designing the deposit product? 3. What is the target market? 7. Developing Product Prototype Workshop

23. Designing Savings Product(s): Brainstorming Guide 4. What new product will the bank introduce? What will be its “brand name” 5. What are the features of the new product? 6. And/or: Will an existing product be improved? What improvements will be introduced to an existing product? 7. Developing Product Prototype Workshop

24. Designing Savings Product(s): Brainstorming Guide 7. What terms and conditions would fit this particular market segment being targeted? (From the market research, refer to what people want from savings products in terms of interest rates, minimum amount to open, earn interest; access to their savings balance, incentives, etc) 7. Developing Product Prototype Workshop

25. Designing Savings Product(s): Brainstorming Guide 8. Where will the product be tested? How long? (6 months? One year?) 9. Product responsibility: who will be responsible for the product pilot testing and monitoring? 7. Developing Product Prototype Workshop

26. After completing the design, you will need: a)Product Manual; b)Marketing Plan; c)Train tellers & other staff. 7. Developing Product Prototype Workshop