Some specific phase III gyan

Hi all,

Last year's experience tells me it's better to provide some (optional) guidance and structure than none at all, given the time and other constraints we are under. So here goes:

First, if you haven't already, then kindly first read these posts for context and continuation: General gyan on the project scope and background and Some phase I guidance.

There are broadly three research questions I can see relating (i) to a market entry decision, and subsequently (ii) to an STP or Segmentation-Targeting-Positioning decision for client firm XYZ. The first, or the zeroth question rather, is a preliminary one that must be acknowledged and gotten out of the way, first thing.

0. Is there a market out there at all?
1. If yes, what are the characteristics of this market?
2. How best to reach the attractive customer segments?

The zeroth research question implicitly asks if there exists an addressable, sizeable, profitable, sustainable market in financial services and/or products given the target population (the young, upwardly mobile, urban middle class).

Now, one may say, "well, look, there are so many firms and products in this space. Ergo, there must be a good, profitable, actionable market out there. No?" Well, likely but not necessarily. The last 2 years in particular teach us that in bubble scenarios, the herd is grossly wrong. We'll have to take this call for ourselves by ourselves. In this case though, I doubt you'll have much trouble making a case for entry versus non-entry. Hint: Broadly glance at what kind of numbers we are talking about here, at the macro-level - the equivalent of a full one-third of India's GDP, from the household sector alone, needs to find a home in some combination of asset classes, every year. Would be nice if (but is by no means mandatory that) your phase III analysis incorporate some thought, rationale and recommendation regarding the entry or non-entry for XYZ in the target space.


Now consider research Qs 1 and 2. Those simple looking research questions are actually quite involved. Q1 has two sides to it - the supply side characteristics of the market and those of the demand side. Let me label these sub-questions 1.1. and 1.2. thus:

 1.1. (Supply side) What combination of products/services/solutions in what asset classes should XYZ consider offering?

 1.2. (Demand side) What is the distribution of target population preferences over asset classes and over the attributes of financial products/services/solutions?


For the supply side, ask if there exist synergies in introducing a set of products rather than just one - in terms of competencies required, talent/skills available, scale, marketing, etc. Imaginative use and application of Secondary and Primary data would be great here. For instance, primary data can at least provide directly the (stated) distribution of current and prospective investments into broadly defined asset classes. Again, this is entirely my idea of how I would think if I were in your seat. It nowhere says I am 100% right in what I am thinking. Hence, you don't have to follow my lead here and can go with some radical, innovative and totally out-of-the-box approach of your own.

For the demand side, primary data in some measure allows us to collect data on target population preferences over financial product attributes (broadly speaking) such as risk/return, time to maturity, tax saving status, benefits sought, flexibility or liquidity at short notice, etc. This rich dataset also provides opportunities for Segmentation of the customer base, along various dimensions of interest (entirely your call what you want to go with). I would rather you try to go with what can be actionable from the client firm's viewpoint.

Once some sort of segmentation base has been decided upon, segmentation done and the segments identified, labeled, sized up and analyzed, then comes Q2 with a targetting and positioning plan for the most attractive segments identified. We've asked some basic Qs about media habits and psychographics etc to help with a rudimentary marketing plan. Essentially, you are able to go one step ahead and tell the client not just what are the most attractive customer segments in the market for so-and-so asset classes, but also how to reach them, communicate with them and sell them the product.

Now the logical Q arises, how did all that we do in class come in handy here? Aha. Good Q. I shall putup a separate post explaining and connecting some of the techniques we covered with some of the research Qs above.

OK, that is it from me for this part. I'd ideally you mull over this with your group. Again, you don't have to go with this plan outline as above but kindly ensure that you bring value to client XYZ.

I'd be happy to get some feedback, comments, queries and clarifications on Phase III thus far. Pls use the comments section below should any such arise.

Some of you may have already started playing the data. Please do. You'll find the practical difficulties associated with collating, filtering, sorting out, analyzing and interpreting real data. That, IMVHO is tremendous learning for the individual, the team and the class as a whole.

Sudhir