A Study into the “Non-Formal & Voluntary Banking Services” of SIBL
CHAPTER-SEVEN: Key Aspects Related to the Marketing of
SME Products in SIBL
7.0 DEMAND CREATION:
The SME division of SIBL basically provides micro credit investments to
SMALL and MEDIUM ENTERPRISES. Because of its unique nature, the
demand for SME investments is different in nature to the demand for
corporate or SME investments. The process flow of demand creation is as
follows:
Customer Needs
Market Identification
Identification
Product Development
Relationship Building Awareness Creation
The RM plays a vital role in all the stages of demand creation apart from
market identification and product development. They provide door-to-door
services for the clients and at the same time are always in search for potential
new clients. Because clients are ignorant about banking products that may
satisfy their needs, the RM identify their needs, evaluate their requirements
and determine which products are most suitable for them.
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7.1 MARKET SEGMENTATION:
The market consists of many types of customers, products and needs and the
marketer has to determine which segments offer the best opportunity for
achieving company objectives. SIBL segments the market for banking
products into three categories based on the nature of the consumer
TABLE : MARKET SEGMENTATION OF SIBL
Segments Target Market
Corporate Enterprises with loan requirement of Taka 600 lacs or
more
Small & Medium Enterprises with loan requirement of Taka50,000/- -
Enterprise 50,00,000/-
Retail Individuals with loan requirements for consumer
purposes of Taka 50,000-10 lacs
SME Market
Trading Manufacturing Agriculture Service
Wholesale Mills
Pathology
Bakery Beverage
SME
Hospital
Press
General Schools &
Stores Colleges
Factory Dairy
7.2 TARGET CUSTOMERS
To succeed in today’s competitive marketplace, organizations must be able to
hold on to its customers by delivering greater value. In order to do this, an
organization must be able to identify the customers who would be benefited
from their products. SIBL has targeted the small and medium enterprises that
have small loan requirements as the target consumers of their SME products.
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However, SIBL does not finance business startups. The business has to be at
least two years old to avail the SME loan facilities offered by SIBL. Most of
such businesses are sole proprietorships. There are some partnerships as
well, but limited companies are rarely seen in this category. The survey that I
had conducted brought up the following results as common characteristics of
the respondents:
The mean age of the respondents was 38.71 years and mode was 33
years.
71.50% of the respondents did not pursue education after completing
their HSC. 44.50% of the respondents did not complete HSC.
The average working capital requirement of the respondents per month
was almost Tk. 28,000.
Thus the target customers can be classified as the entrepreneurs who have
little or no formal education, between the age group of 30-40 years and
having working capital requirement of around Tk. 30,000.
7.3 MARKET POSITIONING:
Every product must have a unique proposition that will enable it to fulfill the
customers’ needs. In case of investments, there are four factors that might
influence the clients’ decisions regarding the selection of a loan from a bank:
Profit Rate
Collateral
Time Involved in Acquiring the Loan
Repayment Scheme and Tenure
Not all factors influence every segment of the market. In the survey
conducted, the following findings were revealed when the respondents were
asked about their prime reason for obtaining SME investments from SIBL:
7.4 Developing the Marketing Mix for SME investments:
PRODUCT:
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In order to serve the market more efficiently, SIBL has designed various
products that will be able to satisfy the needs of the clients. The summary of
all the SME loan product of SIBL is the following-----Characteristics of Small
and Medium Enterprise (SME) of SIBL at a glance --------------
Sl Name of the Amount of Tenure Rate of Characteristics
No. Products Investment profit
1 Bai-Muajjal Maximum 1 year Investment facilities for meeting the
Commercial, 50 Lac taka (Revolving current working capital needs (Revolving
Small Method) Limit)
Enterprise
(SE)
2 HPSM Maximum 2-5 years Fixed assets & terms investment
Commercial, 50 Lac taka Compe opportunities are provided. Equal monthly
Small titive installment repayable.
Enterprise and
(SE) Market
3 HPSM Maximum 2-5 years Oriente To buy car, micro-bus, Autorikhsa,
Transport, 50 Lac taka d delivery van this products is used. Equal
Small Now monthly installment repayment.
Enterprise the
(SE) Profit
4 Bai-muajjal Maximum Maximum rate is Current working capital met up and term
Commercial, 50 Lac taka 4 years 17% investment facilities, equal monthly
installment, (Mid repayment
Small Rate)
Enterprise
5 Murabaha Maximum 1 Current working capital needs fulfillment
Commercial, 50 Lac taka (Revolving (revolving limit)
Small Method)
Enterprise
6 Bai-muajjal Maximum Maximum To purchase raw material/products this
Commercial 2.00 Lac 3 years investment is used (equal monthly
(Micro- taka installment repayment)
Enterprise)
SIBL has various SME products to satisfy the needs of the different types of
clients in the Consumer market. The different loan sizes are set to attract
enterprises of different sizes.
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Investments are approved on the basis of inventory, total receivables & total
payable. Usually, up to 75% of the (inventory+ receivables-payables) is
granted as loan.
PRICE:
The price of investments is actually the rate of profit for it and the charges,
fees or commissions associated with it. In case of SIBL, the pricing for SME
products are as follows:
TABLE : PRICING OF DIFFERENT SME LOAN PRODUCTS OF SIBL
Investment Modes Rate of Profit Investment Processing Fee
HPSM (Commercial) 17% p.a. 1% of loan amount plus VAT
HPSM (Transport) 17% p.a. 1% of the loan amount plus
VAT
SME (Revolving) 17% p.a. 1% of loan amount plus VAT
SME (Installment) 17% p.a. 1% of loan amount plus VAT
Agricultural loan 13% p.a. 1% of loan amount plus VAT
This differentiated pricing method for different amount of investments is
designed to attract clients with various requirements.
PLACE (DISTRIBUTION):
SIBL offers investments to SME clients all over the country. However,
investments are processed centrally in the SME Division of the Asset
Operations Department. The base unit of the distribution channel of the SME
Department is the Unit Office. There are 2-7 investment officers in each unit
office based on the market potential of that particular unit. The senior officers
are responsible for the grass-root level distribution of SME investments. At
present, there are almost 1050 investment officers operating in the country.
The distribution channel of SME investments is as follows:
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Business
development
manager
Relationship Relationship
manager manager
Sales officer Sales officer Sales officer Sales officer
The country is divided into 7 territories. There are 36 branch and 30 Unit
Offices in the country.
PROMOTION:
Due to the nature of clients, direct marketing techniques are very effective for
the promotion of SME investments of SIBL. SIBL has two main types of
promotional activities:
Door-to-Door Service: The Sales officer (SO) identifies potential
clients and reaches them with investment offerings. Most of these
clients are illiterate and do not maintain any financial documents. The
SOs helps them prepare documents required by the bank for them and
provide them with necessary support in activities like account opening,
transaction, etc.
Flyers & Brochures: For the more educated clients, SIBL provides
flyers and brochures in the unit offices as well as in the branches.
These flyers contain specific features of the product they advertise.
However, as this type of promotion is handled by the Marketing
Department, it would not be within the scope of this report to discuss
more elaborately on this promotional tool.
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