Tools For Market Research and Product Concept Development

Market Research for Microfinance in War-affected Areas
Tools for Market Research &

Product Concept Development

By:
Tamsin Wilson (The Springfield Centre)
Straton Habyalimana (Concern Worldwide)
Isabelle Kidney (Concern Worldwide)

January 2004

Concern Worldwide
The Springfield Centre

TABLE OF CONTENTS
PREFACE........................................................................................................................................... 1
ROADMAP.......................................................................................................................................... 2
INTRODUCTION................................................................................................................................. 3
THE PROCESS OF MARKET RESEARCH AND PRODUCT CONCEPT DEVELOPMENT....... 4
ASSESSMENT OF THE MACRO- ENVIRONMENT....................................................................... 5
PURPOSE.............................................................................................................................................. 5
RESOURCES REQUIRED......................................................................................................................... 5
METHODOLOGY..................................................................................................................................... 5
NOTES .................................................................................................................................................. 5
FRAMEWORK FOR ASSESSMENT OF THE MACRO-ENVIRONMENT......................................................... 6
ECONOMIC FACTORS..........................................................................................................................................6
POLITICAL FACTORS ...........................................................................................................................................7
LEGAL FACTORS ................................................................................................................................................7
INFRASTRUCTURE ..............................................................................................................................................7
SOCIAL FACTORS................................................................................................................................................8
ASSESSMENT OF THE LOCAL ENVIRONMENT.......................................................................... 9
PURPOSE.............................................................................................................................................. 9
RESOURCES REQUIRED......................................................................................................................... 9
SAMPLING PROCEDURE......................................................................................................................... 9
METHODOLOGY..................................................................................................................................... 9
NOTES ................................................................................................................................................ 10
FRAMEWORK FOR ASSESSMENT OF THE LOCAL ENVIRONMENT.......................................................... 11
1. WEALTH RANKING: DEFINING POVERTY CHARACTERISTICS ............................................................................11
2. FOCUS GROUP DISCUSSION: MARKETS AND TRANSACTIONS.........................................................................12
3. FOCUS GROUP DISCUSSION: SECURITY, POPULATION MOVEMENT AND HOUSEHOLD RISK EXPOSURE .............13
4. FOCUS GROUP DISCUSSION: SOCIAL CAPITAL AND GENDER..........................................................................14
5. SEMI-STRUCTURED INTERVIEW: HOUSEHOLD FINANCE .................................................................................15
USAGE, ATTITUDE, IMAGE (UAI) QUESTIONNAIRE................................................................. 17
PURPOSE............................................................................................................................................ 17
RESOURCES REQUIRED....................................................................................................................... 17
SAMPLING PROCEDURE....................................................................................................................... 17
METHODOLOGY................................................................................................................................... 17
NOTES ................................................................................................................................................ 18
USAGE, ATTITUDE, IMAGE QUESTIONNAIRE ON MICROFINANCE SERVICES......................................... 19
AWARENESS, KNOWLEDGE AND TRIAL OF SERVICES........................................................................................20
USE OF SERVICES ...........................................................................................................................................21
COST OF SERVICES .........................................................................................................................................21
SUPPLIERS.......................................................................................................................................................22
REASONS FOR NON-PURCHASE OF SERVICES .................................................................................................22
PERCEIVED VALUE OF SERVICES......................................................................................................................23
RESPONDENT CHARACTERISTICS .....................................................................................................................23

PRODUCT DESIGN WHEEL........................................................................................................... 24
PURPOSE............................................................................................................................................ 24
METHODOLOGY................................................................................................................................... 24
THE PRODUCT DESIGN WHEEL........................................................................................................... 25
PRODUCT CONCEPT AND PRICE SENSITIVITY QUESTIONNAIRE....................................... 28
PURPOSE............................................................................................................................................ 28
SAMPLING PROCEDURE....................................................................................................................... 28
METHODOLOGY................................................................................................................................... 28
PRODUCT CONCEPT AND PRICE SENSITIVITY QUESTIONNAIRE........................................................... 30
REACTION TO PRODUCT CONCEPT...................................................................................................................31
RESPONDENT CHARACTERISTICS .....................................................................................................................33
ROAD FORWARD ........................................................................................................................... 34
1. ESSENTIAL RESEARCH KNOWLEDGE: SAMPLING......................................................................... 34
1.1 PURPOSIVE SAMPLING............................................................................................................................34
1.2 STRATIFIED RANDOM SAMPLING.............................................................................................................34
2. ESSENTIAL RESEARCH INFORMATION: METHODS OF DATA COLLECTION..................................... 35
2.1 FOCUS GROUP DISCUSSION...................................................................................................................35
2.2 INTERVIEWING - SEMI-STRUCTURED INTERVIEW (PERSONAL INTERVIEW)..................................................36
2.3 THE QUESTIONNAIRE..............................................................................................................................36
3. NEXT STEPS: PILOT TESTING THE PRODUCT PROTOTYPE........................................................... 37
4. NEXT STEPS: BUSINESS PLANNING.............................................................................................. 37

1

Preface
The Tools for Market Research and Product Concept Development are one of the outputs of an action
research project by Concern Worldwide and the Springfield Centre for Business in Development, funded by
The Enterprise Development and Innovation Fund of the United Kingdoms Department for International
Development. The three-year project, begun in January 2000, comprised two phases. In the first phase of
one year, qualitative field research on the demand-side of microfinance in war-affected contexts was
completed in Angola, Cambodia, Mozambique and Rwanda. In the second phase, the research results
were used to design a new MFI in Rwanda offering innovative microfinance products. The Tools for Market
Research and Product Concept Development were initially devised to guide the development of these new
products in Rwanda.

There has been a history of unsuccessful microfinance interventions in war-affected contexts, characterised
by rapid start up, disbursement of a large volume of loans, high levels of default, limited capacity for loan
recovery and organisational collapse within a few years. The cause is all too often traced back to under-
funded and hurried design and planning, based on inaccurate preconceptions. These Market Research and
Product Concept Development Tools provide a straightforward summary framework for collecting in-depth
and accurate market information in a timely and cost-effective manner. The tools are also not designed for
use immediately after and during armed conflict

The tools are intended for microfinance practitioners who wish to develop from scratch one of the new breed
of microfinance organisations operating in harsh conditions but nonetheless seeking to become profitable in
the long term. They are not for the organisation planning a short-term credit project as part of relief
operations; the cost of the research in terms of time and personnel would be too great.

The adage garbage in, garbage out applies to the process of market research. Without a manager or
advisor that has practical experience of conducting rigorous field research, and who can guide the entire
process, the market research results are likely to be of questionable reliability. Without reliable results, the
ensuing microfinance product(s) will be unlikely to succeed. Therefore, it is vitally important that
organisational capacity for research is analysed prior to using these tools and if necessary external support
sought.

The authors would like to thank the staff of Concern in Rwanda, Haiti and Cambodia for their assistance in
testing these market research and product development tools.

2

Roadmap
The Roadmap helps to navigate through this manual. The tools are intended to be a series of useful guides
to action, taking users sequentially through the different stages in undertaking market research. The
research begins with a broad analysis of the overall environment and ends with a detailed test of the specific
microfinance product that has been developed over the course of the research.

Tool
1
Tool
2
Tool
3
Tool
4
Tool
5
THE MACRO-ENVIRONMENT: Is the political, economic, social and
physical situation conducive to the provision of microfinance?
THE LOCAL ENVIRONMENT: How will factors such as, prevalence of
local markets, transactions that take place, local security, population
movement, household risk exposure, social capital, roles of men and
women, household financial arrangements and local poverty characteristics
influence a future MFI?
CURRENT ATTITUDE TOWARD, USE & PERCEPTIONS OF
MICROFINANCE: What experience and understanding of microfinance
(including informal microfinance) is there? Is microfinance widely used?
Who currently provides microfinance services? Are they valued?
PRODUCT DESIGN PROCESS: What kind of microfinance product would
respond most directly to the wants and needs of clients? How can we
improve on the products offered by other providers? Is there a need for
microfinance services? Is it conforming with microfinance good practice?
PRODUCT CONCEPT AND PRICE SENSITIVITY TEST: What do
potential clients think of the product concept? Is it a product that fits well
with their needs? What do they think are the most important characteristics
of the product? What is a reasonable price for the product?
5
Go To Page
9
17
24
28
Info
ROAD FORWARD: How to carry out interviews? Where to go for further
resources? What to do once the product concept has been developed and
tested?
34
For
THE MARKET RESEARCH TOOLS
3

Introduction
The Market Research Tools for designing microfinance products in war-affected countries are intended to
increase the success of microfinance interventions in these dynamic and complex environments. In the
past, there has been a tendency to simply replicate microfinance models or to design a completely new
model without questioning whether it is attractive to the client or likely to support a sustainable Microfinance
Institution (MFI). These five market research tools comprise qualitative and quantitative methods of data
collection, which guide a research team from firstly collecting information on the environment in which they
operate, to secondly, finding out the wants and needs of potential clients, to thirdly bringing this information
together in the microfinance product design process, to finally testing whether or not the proposed product
concept is indeed helpful and attractive to the target group.

Microfinance is an important element of the coping and recovery process for people who have been affected
by war. Deposit making, the gradual accumulation of savings, helps to reduce the vulnerability of people
who through war may have lost the physical and financial assets, social linkages and income earning or food
production opportunities that are normally used to cushion the household from shock. Loans, especially
small ones for the poor can in some cases help them to develop new income earning work. Studies have
shown that borrowers are prepared to pay extremely high rates of interest (e.g. 100% per day) to
moneylenders in the unstable and uncertain period during and immediately after war.

The most important requirement for microfinance in war-affected countries is that there is demand for
financial services. Subsequently, MFIs or NGOs need to think about how they will intervene to help people
access the services they want, in which case a fairly static population (whether in the place of refuge or at
home) and an acceptable level of local security
1
are the two non-negotiable requirements.

In these conditions, MFIs must however be more skilful in the way that they develop and manage
microfinance services. The market research tools give organisations a head start by ensuring that they have
an excellent understanding of their clients and the environment. This makes good decision-making easier.

The characteristics of the tools that make them useful in war-affected areas are:
They assume little institutional knowledge of the local area as many organisations are prompted by
armed conflict to move into areas that are new to them.
They assume that human resources will have been eroded and therefore, to compensate, utilise a
small range of simple data collecting activities based on verbal communication.
They respect the concept of microfinance markets and encourage organisations not to undermine
already fragile markets.

Looking toward the future, the results of these tools can also be used as a baseline, against which
performance of the MFI can be measured. In order to remain relevant in rapidly changing situations such as
these it will be important for brief market research studies to be carried out at least annually to ensure that
the organisation meets the dynamic needs of the target group and responds to the developing environment.

1
There are no firm rules for when a situation is too insecure. Security advisers, project staff and management need to be responsible for
deciding whether or not the environment is safe enough for the kind of work being undertaken in the local area. In rapidly changing
environments formalised, regular reviews of security and procedures, based on primary and secondary information should take place.
4

The process of Market Research and Product
Concept development
Successful market research and product concept development depends on a controlled process of
research, from start to finish. The process should be divided into different stages with control gates
positioned prior to each stage (Figure 1). These control gates, are simply an opportunity to step back from
the research and analyse performance to check that the organisation is investing in a product that is going to
be successful. It is helpful to create a committee responsible for assessing (using pre-defined indicators of
achievement) whether or not the previous stage was completed satisfactorily and if it is appropriate for the
research to move to the next stage.
Feasibility
Testing
Research
Concept
Stage 2

Market
research
results
(Tools 1,
2 & 3)
Stage 3

Concept
Development
(Tool 4)
Stage 4

Concept
Testing and
modification
(Tool 5)
Stage 5

Concept
Validation
(costing,
pricing,
scale)
Stage 6

Pilot
Testing
GATE 2:
Research must
be complete,
rigorous,
appropriately
analysed and
presented in
such a way that
the information
is easy to
extract.
GATE 3:
Product concept
needs to
respond to the
environment,
client
preferences,
good practices
and MFI
business needs.
GATE 4:
Analysis of the
client
response to
the concept
should lead to
further
refinement of
the product.

GATE 5:
Internal analysis
of the product
should confirm
with greater
certainty the
design of the
product
prototype prior to
pilot testing.
Stage 1

Problem
definition
and
research
planning
Design
GATE 1:
There must be a
clear problem
statement. A
plan should
highlight the
human, financial
and time
resources
required.
Figure 1 The Controlled Process of Market Research and Concept Development
5

ASSESSMENT OF THE MACRO- ENVIRONMENT
This desk study collects secondary, quantitative data from multiple sources. Any successful relief or
development project must look outward to the war-affected environment in which it is operating to predict
future opportunities and help to mitigate future problems and disasters. This tool looks at some of the major
forces that act on MFIs and clients and provides pointers for what should be investigated at the local level in
Tool 2. An understanding of the forces operating at the macro-level is particularly important as normally the
project can do little to influence these and must instead change its behaviour in response. It takes two to
three person days to complete this tool, depending upon the quality and entirety of the information.
Purpose
To know whether or not the macro-environment is conducive to the provision of microfinance.
Resources required
Country information. Some can be purchased on-line from sites such as Political Risk Services
http://www.prsonline.com and Country Watch http://www.countrywatch.com
Other free information is available on a range of sites including ReliefWeb, http://www.reliefweb.int, the
BBC http://news.bbc.co.uk/1/hi/world/africa/country_profiles/default.stm, CIA World Factbook
http://www.ocdi.gov/cia/publications/factbook, 1Upinfo, http://www.1upinfo.com/country-guide-study,
Library of Congress Country Studies, http://lcweb2.loc.gov/frd/cs, Alertnet Country Profiles,
http://www.alertnet.org, International Crisis Group, http://www.intl-crisis-group.org and Global IDP
Project, http://www.idpproject.org. Information may also be obtained in country from government, local
and international agencies.

Methodology
1. Gather together multiple sources of information relating to the framework for the assessment of the
macro-environment on pages 3-5. In war-affected areas, data can be more biased, outdated and
inaccurate than usual, so it is important to use several sources where possible.
2. Draw out the requisite data from the information sources, triangulating (using different sets of data
and different types of analyses) where possible.
3. Write a brief analysis of the information focusing on opportunities and threats to microfinance. The
theme headings in the framework can be used to structure the report. Note should be made of the
subjects that need further investigation later.
Notes
This tool provides vital economic, social, physical, political and legal information that helps to decide
whether or not the wider environment can support a microfinance organisation. The macro-
environment may seem far-removed from the realities of setting up a microfinance project for low-
income people but MFIs are in fact influenced in all kinds of ways, for example:
Tool
1
6

1) Inflation trends show how money has lost value over time and provides an indication of likely
willingness to save in cash.
2) Borrowing and deposit interest rates give a baseline against which to price the new credit or
savings product
3) Distribution of banks shows where there is supportive financial infrastructure for groups or the MFI
to safely deposit savings.
4) Understanding the legal and regulatory environment at the design stage helps to select a
microfinance model and institutional type that can grow without hindrance.
5) The presence of electricity influences the kinds of MIS and accounting systems that could be
developed.
6) Demobilised soldiers have historically proven to be poor microfinance clients. Would the pilot
phase operate in an area with large numbers of demobilised?
7) Returnees are often the most vulnerable. Should an area be selected that has many returnees?

It is essential that this tool is used and adapted with intelligence and flexibility as it will be almost
impossible to gather all of the information suggested; perhaps data will be irrelevant or alternatively only
proxies (or less detailed data) will be available. Therefore, this tool should be taken simply as a guide
and adjusted as necessary.

Framework For Assessment Of The Macro-Environment
2

Economic factors
Theme Key element
Existence of price controls
Change in exchange rate over time
Annual inflation rates over time
National rate of saving and investment
Employment/unemployment
Estimate of the number of people living on less than US$1 per day
Major economic activities by province
State of the national
economy
Standard daily wage rate for labourers and office workers
The National Borrowing and deposit interest rates

2
Key Elements marked with an asterisk are those that are conflict-specific.
IN PRACTICE
In the rush to get the research done it is tempting to pass over this tool and move to ones
that collect more locally relevant information. One research team commented
Practitioners should not skip this tool we did and were probably not as well informed
about the macro-environment as we could have been.
If possible, start collecting material several weeks before you plan to do the analysis. This
makes it relatively simple to draw together the information when you need it.

7

Financial System Depth and breadth of outreach of formal banks, insurance companies and
MFIs (either before, during or after conflict)
Distribution of banks, MFIs and insurance companies by province
Banks that will accept deposits from an MFI
Terms and conditions especially those likely to prevent access by poor
e.g. minimum balance, asset-based lending
Opportunities and
Threats to
Microfinance
Forecasts of risk to international business in short and long term

Political factors
Theme Key element
Analysis of political stability and predictions of future political regimes
Most serious threats to microfinance from political sources
Political Influences on
Microfinance
Forthcoming elections

Legal Factors
Theme Key element
Legal and regulatory
environment for
microfinance
Any existing or planned regulation that is likely to affect the provision of
microfinance. Note; reporting requirements, minimum capital
requirements, accounting procedures, registration.
Options for the legal status of microfinance services if it does not come
under specific microfinance regulation (i.e. it could be governed under
NGO provisions or cooperative law) and implications of same
Interest rate ceilings if applicable
Tax rates for different institutional entities
Restrictions on foreign ownership of companies
Small business regulation

Infrastructure
Theme Key element
Roads per province (Km gravel and tar sealed roads per Sq. Km.)
Bank branches per province
Irrigated land area per province
Number urban centres
Number of clinics/hospitals by province
Number of primary, secondary and tertiary educational establishments
by province or district
Physical
Infrastructure
Email/telephone/electricity access by province

8

Social factors
Theme Key element
Spending on public services as % GDP
Change in pricing of services e.g. education, healthcare
Social services
Access to safe water
Literacy rate (male and female) as % of population National Education
Levels
% Graduating from primary, secondary and tertiary education
Past and projected HIV/AIDS infection rate Health Status of the
Population
Rates of morbidity/mortality
Average land holding Indicators of Wealth
% Population living below the poverty line
Population density by province or district
Population growth rate
*Nature and extent of loss of human capital during the conflict
% Female-headed households by province or district
Languages most commonly used in each province (if different)
*Status of demobilisation/reintegration efforts. Number of demobilised
soldiers by province
*Number of returnees and returned IDPs
Religious groups
Demography
*Number of refugees and IDPs remaining
*Profile of factions e.g. by ethnicity, class, ideology
*Areas of recent insecurity and nature of insecurity
*Areas where civilians have been most affected by fighting
Current Security
Situation
*Prevalence of conflict by province
*Volume, distribution and type of humanitarian relief Emergency Relief
Services
Prevalence of NGOs and donor agencies by province

9

ASSESSMENT OF THE LOCAL ENVIRONMENT
This series of informal discussions (focus group, semi-structured interview and wealth ranking) helps to
collect primary qualitative data on the local environment. The results relating to population movement and
security are particularly important as they help the team to decide whether or not their minimum pre-
conditions for microfinance have been met. The pilot test and the main research study take 12-18 person
days. Additional time will be needed for pre-survey training (length depends upon the experience of staff).
Before the team approaches people in the target area, they should consider how they will present
themselves, as early impressions can take years to shake off. Whilst NGOs inspire trust and openness, they
are also associated with free handouts during and after armed conflict, which has made it difficult for some to
recover loans. If there is a plan to create an independent MF provider or a community managed
organisation, consider creating this image at the research stage.
Purpose
To understand the local environmental conditions and how they influence the provision of microfinance.
Resources required
Skilled facilitators
Facilitator copies of the questions to spark discussion
Transport
Accurate list of names of all adults living in the sample area
Name cards
Sampling procedure
Purposive sampling should be used (see details on page 34). This involves determining the
characteristics of the ideal respondents at the planning stage and then actively seeking out these
people as interviewees. Focus groups should be held with separate groups of men and women.
Methodology
1. Train the research team in the techniques of facilitating focus group discussion, semi-structured
interview and wealth ranking. They also need to understand the concept of purposive sampling.
2. Translate the questions. When done as a group exercise this helps the team to understand the
nuances and purpose of each question. Rarely is external translation accurate enough
3. Meet with local authorities to inform them of the research and gain their support and co-operation.
4. Do a pilot test and further develop the tool in response to the feedback.
5. At the end of each day, analyse the data together, to ensure that the results of previous interviews
inform future questioning.
6. A brief qualitative report should highlight i) Findings significant to the design of the product ii) Areas
that require future in-depth investigation.
Tool
2
10

Notes
The table below details the interview themes and the methods of data collection.

Method and subject of data collection Number
interviews
Participants per
interview
1. Wealth ranking - Defining poverty characteristics 2-4 1-3
2. Focus Group discussion (FGD) - Markets and transactions
3. FGD - Security, population movement & risk exposure
4. FGD - Social capital and gender
2
2-4
2-4
6-12
6-12
6-12
5. Semi-structured Interview (SSI) - Household finance 6-10 1

Interviews should be conducted with separate groups of men and women. An equal number of men
and women should be interviewed. The number of interviews suggested above is only indicative and it
will be necessary to assess the quality and clarity of the data collected to work out whether or not
further interviews need to be performed.

This activity requires skilled facilitators who can put interviewees at ease and probe in an unthreatening
way into the reasons that lie behind straightforward answers. The questions presented below are a
trigger list (and not a question list), which should help the facilitators to develop more detailed
questioning during the interview. Data analysis should be qualitative and the final output should be a
brief report.

Strong co-ordination is required for this tool to run smoothly. Several days before the interviews will be
held, a co-ordinator should visit the area to gain the support of the local leaders and make
appointments to meet interviewees. The purpose of the interviews should be made clear to them so
expectations of future financial support are not created.

IN PRACTICE
Consider the reputation of other NGOs in the area and how you wish to be perceived.
As one person who used this tool remarked Everyone knew that (the MFI) had been
designed by people who drove to the market place in a big NGO Land Cruiser every
day. Trying to make it independent afterwards was always going to be difficult.
Discussing changed gender roles was upsetting for some women interviewees in
Rwanda who had either lost husbands during the genocide or were supporting them in
the local jails. This subject should be handled with sensitivity and tact. There are few
references to the armed conflict in the tools, as interviews seem to go better without.
Inexperienced facilitators often need to be encouraged to listen for and follow up leads in
the conversation, rather than sticking rigidly to the question framework.
One team that used this tool stated that during their data analysis meetings they should
have discussed about the changed mindset of the people, as perceived by the
facilitators. This they thought would have helped them to understand better about the
immediate priorities of potential clients affected by armed conflict.
Having completed this tool, it is important that the researchers can construct i) A
comprehensive list of the benefits respondents think microfinance offers ii) A list of the
local providers of microfinance iii) The main reasons why people save and borrow.
These will be used in Tool 3.
11

Framework for Assessment of the Local Environment

1. Wealth ranking - Defining poverty characteristics
2. FGD - Markets and transactions
3. FGD - Security, population movement & risk exposure
4. FGD - Social capital and gender
5. SSI - Household finance

1. Wealth ranking: Defining poverty characteristics
Plan to do wealth ranking with two to four groups, comprising one to two groups of women and
one to two groups of men. There should be homogeneity within groups but heterogeneity
between groups. Each group should be selected based on characteristics that are important for
the research (such as wealth, sex, experience during the conflict). Remember that the
purpose is not to rank every single potential client but to build up a profile of the characteristics
of different socio-economic groups in the area. Therefore, the notes from the discussion that
takes place are more important than the ranking itself.

1. Define the sample area (this should apply for the entire research process). If it is large,
select smaller administrative areas, of for example 100 households, in which the wealth
ranking will be carried out.
2. Prior to the wealth ranking sessions, collect the names of all household heads in the
smaller administrative area and write each name on a separate, small piece of card.
3. To start the session, in view of the group, select at random 20 to 40 names from the pack
of cards. There is no need to rank more than 40 as the purpose is only to identify
characteristics of socio-economic groups.
4. Read out each name and check that the group is familiar with each of the names.
5. Ask the group to take from the pack of cards one person who is well off and one who is
less well off. The indicators of wealth and poverty should be decided by the group and not
suggested by the facilitator. Lay the cards side by side, the less well off to the left of the
other.
6. Select a third card and ask whether this person is wealthier than the other two, poorer, or
somewhere in the middle. Place the card beside the other two in the row, maintaining the
progression from the very poorest on the left to the wealthiest on the right. Ask the group to
explain why this person is wealthier or poorer.
7. When the facilitator feels that the group understands the process and if there is a literate
person in the group, the cards can be handed to a participant who will read each name
aloud and together with the group place the card in the appropriate position. For each
card, they simply need to explain their reasoning to the facilitator for her to note down.
8. At the end, the facilitator should review the ranking with the group to check that it is correct
and then should write the ranking of each individual on their card.

Supplementary Wealth Indicators
The research team can use the results of the wealth ranking to develop an index of visual
poverty indicators. These can be substantiated through interviews with community
members such as teachers, religious leaders, local elders and political leaders. Cashpor,
TSPI and SHARE have developed such indicators for their own contexts, summarised at
http://www.microfinancegateway.org/poverty/target/hi.html.

12

2. Focus Group Discussion: Markets and Transactions
Use the results of the wealth ranking to identify people from different socio-economic and age
groups to interview. Plan to carry out around two FGDs on this topic, one with a group of
women and one with a group of men, but do more if a clear picture does not emerge from the
results.

Theme Seed questions
Which markets do you know of in this area? Which do you visit
regularly and why do you choose to go to these ones?
Which are the most popular markets and why are they visited
regularly?
On which days of the week do you visit the markets?
Which are the biggest? Which are the smallest? Approximately
how many people sell goods at these markets?
Prevalence of
markets

In your view, why dont more people attend the market to sell
goods? What are the root causes and potential solutions?
At the market, which goods do ordinary people buy most often? Do
they pay for these in cash or in kind?
What currencies do people normally use to buy goods?
Which currency do sellers most prefer to receive as payment for
goods? Why? In which currency do people most like to save?
Why?
What kinds of people most often use barter rather than cash? What
do they usually exchange?
Kinds and
Frequency of
Transactions
Does money buy the same amount of goods now as it did a year
ago? How can you tell?
Have you ever had any problems in buying or selling goods at the
market?
How do you travel to each market? What is the cost of getting to
each of them and how long does it take?
If you go by vehicle, have the prices changed recently?
Accessibility of
markets
Do any traders sell on credit? What do they sell? What is the
quantity that can be borrowed and how much must be repaid?
Seasonality Which products (or services) do you sell at the market or
somewhere else?
In which months do you sell each of these products (or services)?
In which months do you make money that you can save?
In which months do you need to borrow money?

13

3. Focus Group Discussion: Security, population movement and household risk
exposure
3

Plan to carry out approximately four FGDs, two with groups of women and two with groups of
men. Use the results of the wealth ranking to identify people from different socio-economic and
age groups. There is no need to ask all of the questions in a single FGD each can have a
slightly different focus. Do additional FGDs if a clear picture does not emerge.

Theme Seed questions
*Have you heard of attacks on international or local agencies
in this area? When and where did they happen? Who is
thought to be responsible? Are they still in the area?
*Have you heard of people having money or goods stolen
locally? When and where did this happen? Who is thought to
be responsible? Are they still in the area?
*Have you heard of banditry in the area? Who is targeted?
When and where were the last attacks? Which areas are
thought to be most dangerous? Who is thought to be
responsible? Are they still in the area?
*Are the fighting factions still militarily active in the local area?
Security risks
*Are there local areas that remain insecure and where you still
fear to go? What do you think is the major risk in those areas?
At what times of day are these places most insecure?
Is there a history of people moving away from this area? Why
have they left and where have they gone?
*Are there people in this area who were IDPs or refugees?
*Where did they seek refuge? When did they return?
*Are there IDPs and/or refuges in the local area?
*Where have the IDPs and/or refugees come from?
*How long are the IDPs/refugees likely to remain in the area?
Do they appear to be settled?
*How integrated with the local community (social, physical,
economic integration) are they?
Population movement
*Who provides or has in the past provided support to these
groups? Has there been any credit, grants or relief provided?
Have you received credit, grants or relief? What exactly was
provided and what has the outcome been?
*Are people doing new economic activities that you think are
high risk (e.g. crossing minefields to trade, gunrunning or
prostitution)? Which are the most at risk groups? How did they
become involved in the activity?
What are considered the major potential threats to households
today (e.g. banditry, kidnapping, ill health, death of income
earner, looting, landmines, guerrilla activity)? Who are the
most vulnerable members of the household? Why?
How do households mitigate these threats?
*What have been the major problems experienced by
household since the end of conflict/because of the conflict?
Risk exposure and
coping mechanisms
*How have households solved these problems?

3
Seed questions marked with an asterisk are those that are conflict-specific.
14

4. Focus Group Discussion: Social capital and gender
Plan to carry out approximately four FGDs, two with groups of women and two with groups of
men. Use the results of the wealth ranking to identify people from different socio-economic and
age groups. Do additional FGDs if a clear picture does not emerge.

Topic Seed questions
In the past few years what changes have taken place in reciprocal
arrangements, membership of associations and groups,
community problem solving, safety nets, relations within and
between groups?
With which households or individuals does your household co-
operate or interact most closely? In what ways do you work or do
social activities together? Is there a formalised agreement
whereby one does something for the other in return i.e. a
reciprocal arrangement?
What associations and groups does your household belong to?
How does your household try to solve its own problems and the
problems of others (e.g. internal household arrangements and
also burial societies, contributions at weddings, communal
response to natural disasters and emergencies)?
How are different kinds of problems within a household, between
households or between communities normally resolved in this
area?
(If appropriate) What distinct groups/clans exist within the
community and what is the nature of the relations within and
between these groups?
Has there been any change in the relations between rich and poor
in recent years?
Social capital that is
perceived to exist
within the community
How do you get involved in community decision-making? Do you
attend open political meetings? How do you find out about
decisions made at higher levels?
When you compare yourself to the local leaders are they like you
or different? In what ways are they the same and in what ways
are they different?
What are the crops that women are mainly responsible for
cultivating? Do they receive assistance (finance, land or labour)
from men and who owns the final crop? Which are sold and which
consumed by the household?
What are the crops that men are mainly responsible for
cultivating? Do they receive assistance (finance, land or labour)
from women and who owns the final crop? Which are sold and
which consumed by the household?
From which income generating activities do women in the
community earn cash? From which do men earn income?
If women have earned money from an economic activity who
decides how the money is spent and what are the most common
goods or services that are purchased?
Role of men and
women in economic
activity

If men have earned money from an economic activity who decides
how the money is spent and what are the most common goods or
services that are purchased?
15

What are the three most important resources that women are
responsible for managing? And which for men?
Are men/women allowed to be employed outside of the
household?
Do men or women traditionally look after cash in the household?
When a loan is taken, how is the decision made about how the
loan is used?
Role of men and
women in financial
activity
Within the household, who actively saves? Once a lump sum has
been accumulated by men/women, who owns that money or asset
and what is it normally spent on?
What groups for accessing credit or for saving are women/men
involved in?
What role do women generally have in developing and
maintaining social relations with other households and what role
do men have?
Are there myths or beliefs that hinder men or women from
undertaking more roles or activities?
What work groups are women/men a part of?
What groups for community/social events such as weddings and
funerals are women/men involved in? What responsibilities do
they have within these groups?
Can women own land? Can men own land? What kinds of people
in the area have land title?
Role of men and
women in social
activity
(If appropriate) How long have these different social arrangements
been in existence and have they been altered by the armed
conflict?
Are there any differences between households in the role of the
man and woman? (e.g. In some households perhaps the man
makes all the decisions, controls all of the resources and owns all
of the assets, whereas in others perhaps the man and woman
make decisions jointly, share control of the resources and each
own assets). If this is the case why do the differences in social
relations exist?

5. Semi-structured interview: Household finance
Plan to carry out ten semi-structured interviews with five women and five men. Use the results
of the wealth ranking to identify people from different socio-economic and age groups.

Topic Seed questions
If you had no money, in case of emergency what would you do?
What are the most serious threats to your household at the
moment?
Coping
mechanisms
In this area, what amount of cash would most average
households wish to keep available in the house in case of a small
emergency or general expenditure?
16

What are the main ways in which your household gets cash and
food (think of what every member of the household does)? Have
they changed in the past few years?
Which are the main cash and food crops in the area? Which are
the most risky, which yield the highest amounts of profit or food
and which are preferred? For each crop mentioned; When is
money invested? When is the most labour needed? What kinds of
natural resources and inputs are used? How long does it take for
profit to be realised after the initial investment?
Nature of
production/trade
cycles
What are the most important economic or social opportunities for
your household at the present time? What resources are required
to exploit the opportunity?
How do you prefer to save if you ever have spare money that you
can manage not to spend?
How have your preferences for saving (in cash and in kind)
changed over time?
Asset preferences
What have been the overall trends in terms of ownership of
productive assets (e.g. land, livestock) for people in this area?
Which individuals and groups are you aware of in the local
community (no matter how formal or informal) that offer either
deposit services or loan services? (E.g. Banks, Credit Unions,
Post Office, MFI, moneylender, friend that lends money, money
guard, trade credit, deposit collector, RoSCA, ASCA, reciprocal
lending arrangement, funeral associations). What are the terms
and conditions?
Why do you normally borrow money?
Why do you normally save money or build up assets?
When you borrow or save money outside of the home, what is it
that makes you choose the individual or group (formal or informal)
that you normally use? Why dont you use some of the other
providers that you mentioned?
Do you send or receive remittances or enter any informal
arrangements where money is transferred? Does anyone you
know do this?
Microfinance
service provider
preferences
Do you lease equipment or enter any informal arrangement
where you pay to use the equipment belonging to someone else?
Does anyone you know do this?
Looking back, on what occasions has it been necessary to
unexpectedly have to spend large amounts of money. What has
the money been used to purchase? From where or whom have
you got the money?
Household
expenditure
When you have money, what do you most commonly spend the
money on? What are the expensive things that you try to
purchase less frequently?

17

USAGE, ATTITUDE, IMAGE (UAI)
QUESTIONNAIRE
This formal questionnaire collects primary quantitative data. It identifies the special experiences,
behaviour and preferences with regard to microfinance services of potential clients who have been
affected by armed conflict, and takes approximately 30 minutes per questionnaire. The tool is simplified
from a UAI questionnaire described by Alexandra Overy Miehlbradt in her Guide to Market Assessment
for BDS Program Design, 2001.

Purpose
To gather information about the microfinance market, which can then be used to design appropriate
microfinance interventions.
Resources required
Accurate list of names of household heads living in the sample area
List of the important benefits and features provided by microfinance (collected in Tool 2)
List of reasons why local people save and borrow (collected in Tool 2)
List of reasons why people do not use particular microfinance services (collected in Tool 2)
The range of bank and non-bank microfinance services operating locally (collected in Tool 2)
Skilled interviewers
Copies of the questionnaire
Definitions of service providers for question 2
Transport
Sampling procedure
Stratified random sampling (see detailed guidelines on page 32) helps to ensure that the minority
groups in the community are properly represented in a survey. The entire sample population is
divided into categories and then a proportion of each sample is selected at random to take part in
the survey.
Methodology
1. Adjust the questionnaire to the local situation by inserting the list of local service providers
throughout the questionnaire and the local options into questions 4, 12 and 14
2. If needed, translate the questionnaire as a group exercise with the research team to ensure they
all understand the nuances and purpose of each question.
3. Train the research team in administering quantitative questionnaires. This training should be
very practical, culminating in a test of each interviewer. The team also needs to understand the
concept of stratified random sampling.
Tool
3
18

4. Meet with local authorities to keep them informed, if necessary.
5. Do a pilot test and further develop the questionnaire in response to the feedback. Pay particular
attention to the relevance of the coded answers and ensure that every question is easily
understandable without further explanation from the interviewer.
6. Transport the team to the field and aim for each person to perform 8 questionnaires per day
Notes
This tool has been adapted and simplified in order for it to be useful in rural as well as urban war-
affected environments. It relies wholly upon verbal communication, which means that it can be used
with respondents that have no literacy skills and it also attempts to reach a compromise between
high quality market research and the low budgets that are generally available for research.

The questionnaire occasionally offers a choice of answers to questions. These are not designed to
be read aloud to respondents. Instead, the answers that respondents volunteer should be
categorised (coded) by the interviewer, using the list of possible answers on the questionnaire.

IN PRACTICE
When time has been limited, the survey has been shortened rather than the sample size
reduced.
Hire a professional to design a Microsoft Access relational database that can be used for
inputting and storing the large amount of data that will be collected. The database design
should take one to two days work and there are significant benefits over an Excel
spreadsheet in terms of reducing input error, speeding up data input and having a user-
friendly platform storing baseline data that can be easily accessed at a later date. The
database need not be designed to analyse the data as its as easy to copy and paste the final
dataset from Access into Excel and use pivot tables.
Early prototypes of this questionnaire were too time consuming to administer. It is now an
acceptable length but any additional development of the questionnaire should not further
increase its length.
Inexperienced interviewers like to facilitate discussion of survey questions but this cannot be
allowed as it influences the interviewees response. At the pilot test stage, the team needs to
make sure that every question can be answered easily without the need for clarification from
the interviewer.
If leasing or remittances are mentioned during discussions in Tool 2, develop this
questionnaire appropriately.
Women interviewees respond better to women interviewers.
19

Nb All coded answers in this questionnaire need to be modified to reflect the local situation based
on the results of previous research and pilot testing of the questionnaire

Usage, Attitude, Image Questionnaire On Microfinance Services

Interviewed by: Date:

Interview number:

Time Started

Name of respondent: House no.

Location:

Male/Female (CIRCLE)

Age of respondent: (respondent must be aged over 18 years)

Housing characteristics (modify based on wealth ranking findings)

Quality of roof
Thatch Tin or CI sheets Permanent
Quality of walls Poor Average Good
Quality of Floor Compacted mud Concrete
Cleanliness Poor Average Good
Number of rooms <2 2-4 >4
Structural condition Dilapidated Average Good

Back-checked by: Date:
20

Awareness, Knowledge And Trial Of Services

Q1 Which of these services have you heard about? READ OUT LIST OF SERVICE PROVIDERS
FROM BOX BELOW
Yes 1 No 2

Q2 For each service heard about, ask:
What do you know about the (name service)? CHECK WITH DEFINITIONS
Fully understand 1 Partially understand 2 Wrongly informed 3

Q3 For each service that the respondent understands, ask:
Has your household ever used the (name service) ?
Yes 1 No 2

Type of
product
Service provider Q1 Aware Q2 Understand
the service?
Q3 Ever
used?
Individual
Community initiated and managed
Externally initiated and managed

Savings
Regulated bank
Individual

Credit
Regulated bank

21

Use Of Services

Ask questions in this section for each service ever used (Q3). Fill out the chart below for Q4-5.

Q4 Why did you decide to purchase (name service) the first time? (multiple answer)
1. Needed finance for business 6. Needed money to repay a debt
2. Needed school fees 7. Needed money to cultivate land
3. Needed household security 8. Needed money for food
4. Wanted to purchase a house 9. A family member was sick
5. Needed money for a celebration 10. Other (specify)

Q5 How often does your household use (name service)?
1. Every two weeks or more
2. Not every two weeks but at least every month
3. Not every month but at least every three months
4. Not every three months, but at least every six months
5. Not every six months but at least every year
6. Not every year but at least every two years

Type of
product
Service provider Q4 Why
purchased?
Q5 Frequency
Individual
Savings
Regulated bank
Individual
Credit
Regulated bank

Cost Of Services

Q6-10 will be post-coded.

Q6 When you last saved money regularly what was the interest rate or fee?

Q7 When you last saved money regularly how much money did you save?

Q8 When you last took a loan what was the interest rate or fee?

Q9 When you last took a loan how much money did you borrow?

Q10 When you last took a loan for how long did you borrow the money?

22

Suppliers

Repeat questions in this section for each service respondent has ever used (Q3).

Q11 The last time you used (name service) who provided the service?
1. An individual (specify whether friend, relative, neighbour etc.)
2. An NGO (give name)
3. A business (give name and type e.g. coffee buyer
4. Government scheme (give name)

Q12 Why was this particular service supplier chosen? (Multiple answer)
1. Interest rate/fees were low 6. They made decisions quickly
2. It was the cheapest 7. They gave instant access to savings
3. The organisation is trustworthy 8. It was free
4. It was the only one available 9. I was persuaded to join
5. They provided the best service 10. Other (SPECIFY)

Q13 Compared to your expectations, how satisfied were you the last time you used the service?
1. Extremely satisfied
2. Satisfied
3. Dissatisfied
4. Extremely dissatisfied

Reasons For Non-Purchase Of Services

Ask questions in this section for each service that respondent understands (Q1 Aware) but has never
purchased (Q3 Ever purchased)

Q14 Why has your household never used (name service)? (Multiple answers)
1. Too poor 6. Get it for free
2. Don't need 7. Did not have a guarantee
3. Too expensive 8. Terms and repayment period difficult
4. Save in the house 9. Did not trust them
5. Unavailable in this area 10. Was not eligible

Type of
product
Service provider Q11 Last
supplier
Q12 Why
this
supplier?
(Multiple
answers
allowed)
Q13
Satisfaction
Q14 Non
purchase
reasons
(multiple
answers
allowed)
Individual

Savings
Regulated bank
Individual

Credit
Regulated bank

23

Perceived Value Of Services

Ask questions in this section for all microfinance services
Q15 Please rank the importance of these services for the day to day running of your household and
economic activities.
4=Extremely important 3=Quite important 2= A little important 1=Not important 0=Don't know

Type of
product
Service provider Q15
Importance
Individual
Savings
Regulated bank
Individual
Credit
Regulated bank

Respondent Characteristics

Write
number
Q16 How many people live in your household?
Q17 How many people does your household support?
Q18 How many people are able to work in your household?
Q19 What land area does your household own?

Q20 What are the main ways in which your household produces food and earns money? (OPEN ENDED)

Q21 Are there any other financial services that you think might be important for your household or for
your livelihood activities? (OPEN ENDED)

Time ended

THANK RESPONDENT AND TERMINATE INTERVIEW
24

PRODUCT DESIGN WHEEL
This is a process of synthesising and analysing information on client needs, MFI business needs, other
microfinance providers and microfinance good practice (no matter how harsh the war-affected
environment the new microfinance product must conform with microfinance good practices). Together,
the research team analyses primary and secondary data to create a competitive and attractive
microfinance product concept . The entire team will be involved in a session that lasts 0.5 day.

Purpose
To identify the characteristics of a microfinance product and delivery mechanism that will be most
competitive and attractive within the market place.
Resources required
Donor Guidelines for Microfinance International Best Practice http://www.gdrc.org/icm/inspire/donor-
guidelines.html
The entire research team
Flipchart paper and pens
Detailed information on the products offered by other microfinance providers locally
Summary of results from tools 2 and 3
Methodology
1. Prior to the workshop, ensure that each workshop participant has had time to read the summary of
results from tools 1-3 and the Donor Guidelines for Microfinance International Best Practice.
2. On poster paper, draw several Product Design Wheels prior to the workshop.
3. Starting with the Client Preferences Wheel, use information gathered using Tools 2 and 3 to
complete each section in the wheel. Emphasise that this is their wish list, which most likely will
need to be adapted to create a product that can be sustainable.
4. Next identify all of the different formal and informal institutions that offer microfinance services in the
community (See results of Tools 2 and 3).
5. Complete a Competitor Product Wheel for each competitor.
6. Finally, mindful of microfinance good practice, MFI business needs, client preferences and
competitor products, on the Product Design Wheel brainstorm the ways in which the MFI could
create a new product that would be most attractive to potential clients.
7. Agree upon the characteristics of the product concept that will be developed.
Tool
4
25

The Product Design Wheel

The Product Design Wheel is composed of the seven features of a microfinance product in two concentric
circles. The inside circle includes the most fundamental features of products; the product itself, its price, the
place of supply and promotion. The outer circle includes additional, special features specific to service
products. These emphasise the importance of the clients experience of buying and using a product; the
people with whom the client interacts, the process followed (e.g. application, approval, disbursal and
repayment of a loan) and the tangible physical evidence providing the client with visual clues as to the kind
of intangible service product that has been purchased.

On very large sheets of flipchart paper, one design wheel should be completed for each of the following
groups:
Potential clients - To illustrate their preferences overall.
Each competitor - To show the kinds of product with which the new one will be competing (If there
are few providers in the market this should include friends or moneylenders).
The new product - The design of the new product should respond to the preferences of the clients
(the Client Preferences wheel), improve on the competitors products (The Competitor Product
Wheels), adhere to microfinance good practice and respond to the local and macro-environment
(Tools 1 & 2).

The chart below can be used to check that all of the different design aspects of a product have been
considered when completing the design wheels.

PRODUCT CHARACTERISTICS: THE 7 PS
PRODUCT TERMS AND CONDITIONS
Defined or restricted use of loan
Withdrawal terms
Opening/minimum savings balance
Loan term
Loan approval and disbursement times
Collateral or collateral substitutes group based or individual?
Repayment structure
Loan size
IN PRACTICE
One team that used this tool originally designed a product that generously met all the
needs of the people that had been interviewed for tools 2 and 3... but would have been
responsible for bankrupting the institution in less than a year! The product could not
have succeeded as they hadnt considered how the MFI would sustain itself or whether
the design adhered to best practice.
It is very helpful to involve the entire team in this discussion as different perspectives
help to create a balanced product and later when the product is explained to clients, staff
fully understands it and believe in it.

26

PRICE
Interest rate
Withdrawal and transaction costs
Statement/ledger/loan fees
Prompt payment incentives
Any other costs or bonuses provided to the client

PLACE
Main place of supply of microfinance services (N.b. security situation):
At home (agent visits home)
At the branch
In a third location e.g. in a meeting hall, in the branch of another bank or at an ATM
PROMOTION
Entertainment (e.g. drama, songs and puppet shows)
Advertising (e.g. billboards, leaflets, posters, radio commercials, megaphones
mounted on vehicles)
Promotion (e.g. vouchers, gifts for new clients)
Public relations (e.g. appearance on radio, articles in the newspaper),
Direct marketing (e.g. house to house selling, peer educators)
PEOPLE
The quality of relationship created between the front office staff and the clients
Human resources and management policy
Systems rewarding or recognising outstanding achievement
Kind of leadership does it continually emphasise customer care?
PROCESS The system through which the product is delivered.
The accessibility of the lender or deposit taker, day-to-day
How quickly the transaction is processed and documented
The queues/waiting involved
The amount of paperwork to be filled in
How the staff are protected from robbery and /or assault in insecure areas
How money is stored and moved
Procedures when a loan repayment falls past due. Involvement of local leadership or
legal structures?
The complaints procedure if problems arise
In group guarantee methodologies, the performance of other borrowers in a group
PHYSICAL EVIDENCE
The atmosphere that greets clients when they enter the branch
Physical appearance of branch or meeting room
Kinds of vehicles bicycles, motorbikes or land cruisers?
Furnishing, seating
Lighting and background music
Corporate colours
Appearance of staff
Passbooks, cards and statements, appearance of promotional brochures and posters.
27

People
Physical
evidence
Process
Place
Promotion
Price
Product terms
and conditions
Clients
People
Physical
evidence
Process
Place
Promotion
Price
Product terms
and conditions
Competitor
1, 2 etc
People
Physical
evidence
Process
Place
Promotion
Price
Product terms
and conditions
New
product
Client Preferences Wheel
Competitor Product Wheel
New Product Design Wheel
28

PRODUCT CONCEPT AND PRICE SENSITIVITY
QUESTIONNAIRE
This formal questionnaire enables the team to collect primary quantitative data on the reaction of potential
clients to the proposed microfinance product. It takes 20 minutes per questionnaire. This tool is adapted
from the Micro-enterprise Best Practice Technical Note by Alexandra Overy Miehlbradt (1999) Applying
Market Research Tools to the Design and Improvement of Business Development Services.
Purpose
To know the reaction of potential clients to the proposed microfinance product design.
Resources required
Accurate list of names of all adults living in the sample area
Skilled interviewers
Copies of the questionnaire
Show cards to accompany the questionnaire
Transport
Sampling procedure
Stratified random sampling should be used (see detailed explanation on page 32)
Methodology
1. If necessary, provide refresher training
2. The product concept at the beginning of the questionnaire is critical. This must be clear, accurate
and unambiguous and it should describe the most important aspects of the 7Ps
3. Determine the price scale for question 7 and adapt answer options in questions 2 and 3 using
information collected by Tool2.
4. Translate the questionnaire as a group exercise with the research team to ensure they all
understand the nuances and purpose of each question.
5. Meet with local authorities to keep them informed, if necessary.
6. Do a pilot test and further develop the questionnaire in response to the feedback. Pay particular
attention to the relevance of the coded answers and ensure that every question is easily
understandable without further explanation from the interviewer.
7. Transport the team to the field and aim for each person to perform 10 questionnaires per day.
Tool
5
29

IN PRACTICE
This tool has been used most successfully when an unambiguous and detailed product
description has been created.
Finding the correct respondent identified in the sample design can easily become a
tedious and time consuming exercise unless careful planning is done. Interviewees
assigned to one interviewer should be grouped according to their proximity to each
other. As with Tool 3, it is possible to use a simpler random sampling methodology
where an interview is performed with every tenth household on a pre-defined route, but
there is the danger that minority groups are not represented in adequate numbers to be
able to draw conclusions from the data.
Women interviewees respond better to women interviewers.
A separate questionnaire should be created for each product concept that is tested.
People selected for previous interviews need not be purposefully excluded from this
survey. It is however important that all are selected at random using the stratified
random sampling methodology.
30

Nb All coded answers in this questionnaire need to be modified to reflect the local situation based
on the results of previous research and pilot testing of the questionnaire

Product Concept And Price Sensitivity Questionnaire

Interviewed by: Date:

Interview number:

Time Started

Name of respondent: House no.

Location:

Male/Female (CIRCLE)

Age of respondent: (respondent must be aged over 18 years)

Housing characteristics (modify based on wealth ranking findings) (tick)

Quality of roof
Thatch Tin or CI sheets Permanent
Quality of walls Poor Average Good
Quality of Floor Compacted mud Concrete
Cleanliness Poor Average Good
Number of rooms <2 2-4 >4
Structural condition Dilapidated Average Good

Back-checked by: Date:
31

Reaction To Product Concept

Read out a detailed description of the service concept (This description should be written on a card so that
literate people can hold the card and read with the interviewer. However, the interviewer should never
assume literacy and therefore should always read the text aloud.) e.g.

This microfinance service allows you to save money safely with a female representative who
would visit the village every day. You could deposit with her as much or as little of your
money as you wanted. The amount is up to you according to what you can comfortably
afford. There is no minimum or maximum amount. Your deposited money would be written
down for your records in a small book. Your money would be stored safely in a bank, but if
you needed to take out your money in an emergency you could do so by giving our
representative one days notice. This is a particularly safe way of storing money because it
cannot be stolen or lost. It is also accessible because by giving just twenty-four hours notice,
you will receive your money. A small fee is paid which covers our representatives visiting
your village every day and our storing your money safely.

Q1 What do you think about the microfinance service that I have described?.What else do you
like?What else do you dislike? (Write down response word for word).

Q2 I am now going to read out some characteristics of savings and credit services (informal or formal). I'll
read them through from beginning to end, once, and then I'll read them out again one by one. For
each characteristic please tell me if you believe that:

1=There is no service that offers this feature satisfactorily to your household
2=There is at least one service that offers this feature satisfactorily to your household
3=There are many services that offer this feature satisfactorily to your household.

Characteristics Q2 Satisfaction
(rank each)
Fast access to savings
Flexible savings
Option to save daily and borrow daily
Individual product
Credit agents in the village or coming to the village
Staff that are friendly and respectful towards clients
Safety of money
Waiting/meeting time
Confidentiality
32

Q3 Which of these characteristics is most important to your household? Which is the second
most important?
Most important = 1 Second most important = 2

Characteristics Q3 Most important characteristics (choose two)
1
st
most important 2
nd
most important
Fast access to savings
Flexible saving
Option to save daily and borrow daily
Individual product
Credit agents in the village or coming to the
village

Staff that are friendly and respectful towards
clients

Safety of money
Waiting/meeting time
Confidentiality

Q4 How often would you like to use the service described above?

Frequency Q4 Tick one
Every day
Twice a week
Once a week
Once every two weeks
Once a month
Once every three months
Once every six months
Once a year
Less frequently than once a year

Q5 Overall, how important would you say that the service described above would be for your
household?

Q5 Tick one
Extremely or often helpful to your household
Somewhat or sometimes helpful to your household
A little or occasionally helpful to your household
Not at all helpful to your household

Q6 Based upon what I have told you about the microfinance service, how interested would you
be in using the service:

Q6 Tick
one
Definitely interested
Probably interested
Probably not interested
Definitely not interested
33

Q7 At what cost on this line do you begin to feel that you would no longer be interested in saving
1000RFr with the microfinance service? The numbers on the card represent Rwandan Francs. For
every 1000 RFr saved, the service would receive the amount on the card in payment for collecting and
safely storing your money. (circle).

2 4 6 8 10 12 14 16 18 20

Q8 If at (mention price threshold), you would no longer be interested in (saving), where or with
whom would you (save?).
1.
2.
3.

Respondent Characteristics

Write number
Q9 How many people live in your household?
Q10 How many people does your household support?
Q11 How many people are able to work in your household?
Q12 What land area does your household own?

Q13 What are the main ways in which your household produces food and earns money? (OPEN
ENDED)

Q14 Are there any other financial services that you think might be important for your household or
for your livelihood activities? (OPEN ENDED)

Time ended

THANK THE RESPONDENT AND TERMINATE THE INTERVIEW
34

Road Forward
The tools presented in this document offer a summary framework for conducting market research.
Additional resources will be required and this section provides some guidance as to where to consult
appropriate information. These complement the tools by providing more detailed information on the process
or by explaining what should happen after the product concept has been developed:
1. Essential research Knowledge: Sampling
2. Essential Research Knowledge: Methods of Data Collection
3. Next Steps: Pilot testing the product concept
4. Next Steps: Business Planning

1. Essential Research Knowledge: Sampling
1.1 Purposive Sampling
Used for focus groups and semi-structured interviews. This is a relatively quick and cheap way of
getting a targeted sample.
The characteristics of people considered important to the research e.g. the poorest, community
opinion leaders, IDP returnees, refugees, the demobilised are targeted.
People who fit each criteria are identified by asking knowledgeable people within the community.

1.2 Stratified Random Sampling
Stratified random sampling is particularly useful for microfinance research where it is possible that the
very poorest, or other minority groups, would be under-represented in a simple random sample. It is
more expensive than a simple random survey but usually worthwhile in terms of the quality of the data
that can be obtained.
It requires an accurate list of every household in the defined sample area, which can normally be
obtained from local government or camp managers.
One or two groups of local people who know the community well should be asked to group the
population according to specific criteria.
An example of how the population can be divided into groups is shown in the table below. Criteria can
be changed depending upon the priorities of the research team.
The criteria in the example above give rise to 12 possible categories, see table below, and this should
be the maximum number produced, to maintain a reasonable sample size in each category :

Household type Less poor Quite poor Very poor
Male headed
Female headed
Child headed

Approximately 10% of each category should be sampled but the proportion should be increased if some
categories contain few people (see example of child headed households in table below):
35

Household type Less poor Quite poor Very poor
Total
no.
Sample
no.
Total
no.
Sample
no.
Total
no.
Sample
no.
Male headed 600 60 1500 150 500 50
Female headed 400 40 800 80 400 40
Child headed 4 4 50 25 100 30

Create a list of names of households in each category and assign a unique number to each. For each
category use a random number chart (available on the Internet) to select at random the pre-agreed
number of households.
Agree contingency plans for when people selected from the list are unavailable for interview.

If a list of names cannot be obtained and stratified random sampling is therefore too difficult, the second
best option is random sampling where every tenth house in a village is selected during a random walk.

Further Resources on Sampling Procedures

Sample size calculator: http://www.questaresearch.com/calc_ss_std.php
Random number table (1-600)
http://www.mrs.umn.edu/~sungurea/introstat/public/instruction/ranbox/randomnumbersII.html
Numerous University websites provide guidelines on sampling methodology; access them
through http://www.google.com
David Wilkinson (2000) The Researchers Toolkit: The Complete guide to Practitioner
Research, Routledge Falmer, ISBN 0415215668
Mark Saunders, Philip Lewis, Adrian Thornhill (2000) Research Methods for Business
Students, Prentice Hall, ISBN 0273658042
William G. Zikmund (2003) Business Research methods, Thomson South Western, ISBN
0030350840

2. Essential Research Information: Methods of Data Collection

2.1 Focus Group Discussion
Prior to the discussion, the team should translate and refine the suggested themes and seed
questions, adding, subtracting or amending where members think necessary.
Select groups using purposive sampling (see below).
Groups should include no less than 6 and no more than 12 people.
The group members should be selected on the basis of their homogeneity and similar backgrounds.
Groups should be single sex.
Try to ensure that the discussion is held in a quiet place where you are not going to be interrupted.
Encourage everyone to introduce themselves at the beginning of the session and pass a sheet of
paper around the group, asking a literate group member to record the names if necessary.
Explain the purpose of the interview at the beginning.
Start the interview with unthreatening more general questions and towards the end move to more
sensitive topics.
Info
36

It is imperative that the seed questions are not regarded as exhaustive; Questions are suggested to
illustrate the kinds of areas that should be investigated.
Probe to increase validity, clarity and completeness of the response.
Take notes during the session and if possible bring along a designated note taker.
The research team should meet daily to carry out a verbal analysis of the data, concentrating on areas
where questioning has thrown up surprising information or information that affects microfinance
provision.

2.2 Interviewing - Semi-structured interview (Personal Interview)
Prior to the discussion, the team should translate and refine the suggested themes and seed
questions, adding, subtracting or amending where members think necessary.
Select individuals using purposive sampling and ensure that people of both sexes, with a variety of
ages, backgrounds and religions are included. If there are different factions within communities,
ensure that they too are represented.
If it is socially acceptable, try to ensure that the discussion is held in a quiet place where you are not
going to be interrupted.
Explain the purpose of the interview at the beginning. Stress the confidentiality of the interview, its
approximate length, the voluntary nature of participation and that the client will have an opportunity to
ask questions.
Start the interview with unthreatening more general questions and towards the end move to more
sensitive topics; semi-structured interviews are the main opportunity to ask the most sensitive
questions that the team has.
It is imperative that the seed questions are not regarded as exhaustive; Questions are suggested to
illustrate the kinds of areas that should be investigated.
Probe to increase validity, clarity and completeness of the response.
Take notes immediately after the each interview.
Meet daily to carry out a verbal analysis of the data, concentrating on areas where questioning has
thrown up surprising information or information that affects microfinance provision.

2.3 The Questionnaire
The research team should translate the questionnaire together to gain a complete understanding of
how it should be administered.
Ensure that it is pilot tested to remove ambiguous phrases and to clarify coding.
If it is socially acceptable, try to ensure that the discussion is held in a quiet place where you are not
going to be interrupted.
Explain the purpose of the survey, the kind of information sought and how it will be used.
Stress the confidentiality of the interview, its approximate length, the voluntary nature of participation
and that the client will have an opportunity to ask questions at the end.
Ask the questions exactly as written and in the order presented. Do not ask probing questions; the
questions should be self-evident. If in the pilot test it appears that they are not, they need to be
changed.
Maintain a conversational level of communication and a comfortable rapport.

37

Further Resources on Methods of Data Collection

William G. Zikmund (2003) Business Research methods, Thomson South Western, ISBN
0030350840
Mark Saunders, Philip Lewis, Adrian Thornhill (2000) Research Methods for Business
Students, Prentice Hall, ISBN 0273658042
Alexandra Overy miehlbradt (1999) Applying Market Research Tools to the design and
Improvement of BDS, Technical Note, Microenterprise best practices
http://www.mip.org/pdfs/mbp/applying_market_research.pdf
Geoff Lancaster (no date) Marketing Research, DA Group, http://www.da-
group.co.uk/geoff/research.htm
Market Research for Microfinance. A course run by Microsave Africa.
http://www.microsave-africa.com
Monique Cohen and Jennifer Sebstad (2002) Listening to Clients: Tools for Assessing the
Financial Service Needs and Preferences of the Poor, Technical Note, AIMS Project

3. Next Steps: Pilot Testing the Product Prototype

Once the product concept has been developed (Tool 5), the most common mistake is to launch the
product without any further testing. But it is important to remember that at this stage, the product is little
more than an idea. Pilot Testing is a controlled and structured process whereby the organisation
prepares its systems and trains its staff to offer the product and the product is released to the public on a
small-scale with close monitoring. Pilot Testing occurs prior to the big launch of the product and
ensures that glitches have been removed beforehand.

The process of pilot testing requires substantial planning and preparation. An authoritative and thorough
guide to pilot testing for microfinance has been developed by Microsave Africa and is available on their
website at http://www.microsave-africa.com. A summary of the process is presented below:

4. Next Steps: Business planning

Once a new product has been pilot tested, it needs to be fully integrated into the MFIs institutional
structure through the business planning process. In most respects, business planning should differ little
between MFIs in war affected communities and those in war free communities and therefore the
mainstream planning guides listed below are appropriate. It should be emphasised that the ultimate
goal of profitability (sustainability) applies as much in war-affected countries as in war-free ones.

There are however a few areas where managers will find that adjustments need to be made:
Info
Create the
pilot test team
Develop the
testing plan
Define product
objectives
Prepare
systems
Model financial
projections
Document
product
definitions
Develop
marketing
materials
Evaluate the
test
Commence
the pilot test
Train relevant
staff
38

Higher costs: higher fixed and running costs for transport, higher staff costs.
Human resources: Few staff with experience of professionalised microfinance services, difficulty in
recruiting experienced international staff.
Limited flexibility: Insecurity may prevent the design of more flexible products and services.
Review: More frequent review of operations due to the dynamic and complex environment.
Time to profitability (sustainability): Instead of achieving sustainability in 5-7 years, it may take
closer to ten.
Donor funding: Only short-term donor funding available for a longer-term commitment.

Further Resources on Business Planning

Sheldon, T. and Waterfield, C. (2000) Business Planning for Microfinance Institutions
available from PACT Publications, email books@pactpub.org, www.pactpub.com
GTZ (2000) A Risk Management Framework for Microfinance Institutions, GTZ
Peck Christen R. (1997) Banking Services for the Poor: Managing for Financial Success,
An Expanded and Revised Guidebook for Microfinance Institutions, Chapter 6, Strategic
Financial Planning
UNDP (1997) MicroStart: a guide for planning, starting and managing a microfinance
programme, UNDP
Helms, B. and Grace, L. (2002) CGAP Costing Tool, CGAP, Washington DC,
Software package: "ABC for MFIs" based on the paper and designed by Kim Craig,
ABC version 2.2 can be downloaded at http://www.geocities.com/kimcraigtt/index.html
Lunde, S.A.(2001), Using Microfin 3.0: A handbook for operational planning and
financial modeling, Pact Publications

Info

Tools For Market Research and Product Concept Development

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Tools For Market Research and Product Concept Development

Enviado por

Direitos autorais:

Formatos disponíveis

Market Research for Microfinance in War-affected Areas

Tools for Market Research &

Você também pode gostar