Factors influencing new product development in microfinance institutions: a perspective from north Indian microfinance institutions

Indicators

CFTS

SONATA

MIMO

Drishtee

Trust on 

Customers 

Graduate 

customers who 

have successfully 

run 3 or more 

cycles of loans

Graduate 

customers as well 

as new customers. 

HL and EL—open 

to any person who 

falls under the 

eligibility criteria 

of the MIMO loan 

product. 

Anybody who 

is willing to the 

company’s rules 

and regulations are 

eligible for loans as 

KO in a village. 

Positioning Through this 

product, CFTS 

remains to 

be a pro poor 

company to meet 

the requirements 

of its loyal 

customer base. 

Through this 

product, SONATA 

wants to position 

itself as a company 

which offers 

demand based 

products at 

reasonable cost 

with quality in 

service delivery.  

These products 

are designed 

to capture the 

attention of 

market. These 

are need based 

products, based 

on customers’ 

perception of their 

business growth. 

Through these 

products, company 

would like to 

position itself as a 

network available 

near people’s place 

with a diverse range 

of services available 

to them through 

their retail kiosks

(c) 

Cannibalization

The study indicates that factors like cannibalization (one product taken 

over by another product) can also crop up whenever there is an introduction 

of new product. For example in Sonata, the new product was getting more 

popular among the customers as Income Generation Loan (IGL) product 

was of very small amount. Also the staff responsible for promoting IGL was 

seeing it as a threat to their pay packets which included incentives on per-

formance as well as the amount.

Organization Culture 

The culture of an organization decides its pathways of growth. This was vis-

ible in the culture of MIMO through which it dedicated itself to reach out 

to its customers with a wide range of products and services. MIMO is open to 

experimentation and since inception it has tried and tested many new prod-

ucts as per the demands of the market. Even Sonata has dedicated a small 

portion of company’s budget for product innovation (Table 5). Similar is the 

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Sanjeev KAPOOR and Gaurav SINHA

98 

Journal of Innovation Economics – 2013/1 – n° 11 

case with Drishtee as it is open to experimentation and believes in quality 

service delivery. It ensures all types of services through its kiosks including 

health, education and other retail products. However the culture is different 

in CFTS which can be considered among pioneers in microfinance. The or-

ganization is open to line experimentation in which the base delivery model 

remains the same, while the product features are changed a bit to suit the 

needs of the target segment. In the past the organization had bitter experi-

ence while changing its base model (Table 5).