XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Research in the age of Pragmatism Reinterpret Redesign Reinvent XXII Annual Seminar.

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Research in the age of Pragmatism Reinterpret Redesign Reinvent XXII Annual Seminar

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Making Consumer Segmentation a Real Time Process Open New Doors XXII Annual Seminar 2 Anjan Kumar Ghosh, Senior Vice President Bhavesh Mansinghani, Research Director Hansa Research

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Background Our client is a leading player in the financial services space offering consumer finance and financing capital requirements of SMEs Client product portfolio: Consumer durable loan Personal Loan Small Business Loan Loan against property Current business environment suggests the following facts and hypotheses: Higher the affluence of the customers, higher is the ticket size for their loan Servicing cost as a proportion of ticket size is lower for the high ticket loans Although CIBIL and internal audits ensure that creditworthiness of customers is evaluated properly before loan disbursal, the system currently does not ensure appropriate targeting of the loan to the consumer segment So the need was to set up a system that facilitated effective targeting of offerings in the market

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Key client questions and thought for research Key questions Are we reaching the affluent audience? At the time of loan application, is it possible to assess the affluence level of an individual? Thought for Research Identify indicators to measure the affluence level and create affluence segments of current customers Basis the affluence segment of the current customer base, identify cross-selling and up-selling opportunities Identify variables that can be included in the loan application form, to assess the affluence segment for new acquisitions; thus aid in better targeting

Are we reaching the affluent audience? Decoding Affluence Applying the HPI Construct on the existing customer base Affluence profile across business verticals Implications for the marketer

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Decoding affluence Handicapped in situations where the target group is intrinsically homogenous Conventional SEC not strongly correlated with affluence Possible number of segments limited to currently available options MHI Patently unstable on account of hesitance to disclose the correct MHI leading to over claims or under claims Problem maybe accentuated amongst SMEs Scientific method to segregate and target the consumers basis a more direct measure of affluence

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Household Premiumness Index (HPI) An established system of classifying consumers, based on indicators from the Indian Readership Survey (IRS) It covers ownership of durables, consumption of FMCG categories, and demographic measures. The HPI philosophy : If a home is premium, it necessarily gets reflected in product consumption or ownership. Defining premiumness : Something that is desired by most but affordable for few. Hence, we define premiumness as inverse of penetration. Non-judgmental approach Consistent across all types of products/services Scores obtained for all indicators are aggregated for a household and indexed to a maximum of 1000. Provides the opportunity to define as many segments as desired by the marketer

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Task involves profiling client customers through variables that determine affluence and go into computing HPI Census being unrealistic, estimation needs to be done through a sample survey of clients customers Sample selection needs to ensure representation of customers for its various product verticals Within a vertical, the sample of current customers ought to match the universe profile on key variables, in order to have an accurate measure of affluence Applying the HPI Construct on the existing customer base

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Ensuring representation of the sample The primary research to ascertain HPI was conducted amongst a representative sample that was drawn randomly from the current customer database, after stratifying them on basis of relevant parameters for each business vertical. The sampling variables used are listed below Consumer Durables (CD) Personal Loans (PL) Small Business Loans (SBL) Loan Against Property (LAP) Branch No. of yrs since enrolled Status : Live / ExpiredSalaried / Self employedSource of acquisitionEMI ( 1.05L) Credit program code Loan Amount (>1lac, 2200,

XXII nd Annual MRSI Seminar, 17-18 December 2012, Gurgaon Application form We want to know you better Please tick the relevant boxes. In case of multiple items, give details of the latest item bought. Preferred Language Net monthly income Rs.75000 Which of the following do you own? Microwave Cooking range Electric smoke chimney Printer Laptop Vacuum cleaner Please tell us about your car New car Second hand car Do not own |Was the car bought on a loan? Yes No Please tell us the price of the car < 5Lacs 5-10Lacs >10Lacs|Month & Yr of purchase, Please tell us about your fridge 280L or less Greater than 280L Do not own Please tell us about your TV Normal TV Normal -Flat TV LCD/LED Plasma Size of the TV 21inch or less Between 21-30 inch 30inch or more Please tell us about your washing machine Semi Automatic Fully Automatic Do not own Type of internet access at home? Broadband Dial-up Wireless data card Do not own Please indicate your level of education SSC/HSC Diploma Graduate Post Graduate What type of credit card do you have? Platinum/Titanium Gold Silver Others_________ Do not own What type of insurance do you have? Life Car Medical Property Plant & Machinery Other _____________ Do not own Have you traveled abroad in the last year? Yes No DECLARATION

XXII nd Annual MRSI Seminar, 17-18 December 2012, Gurgaon What did we achieve? We could evolve a set of classification variables which are good enough to identify heterogeneity in a largely homogenous audience Apply an algorithm to categorize customers into a particular segment on a real time basis, at the time of loan application HPI coupled with LCM opens an opportunity for a REAL TIME SEGMENTATION PROCESS

Thank You

Appendix

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Segmentation Variables VARIABLES Cooking Range Dish washing Machine Electrical Smoke Chimney Electric Geyser Electric Kettle Laptop Microwa ve oven PC / Desktop Printer Vacuum Cleaner TV Air conditio ners Internet access Transpo rtation

XXII Annual MRSI Seminar, 17-18 December 2012, Gurgaon Research in the age of Pragmatism Reinterpret Redesign Reinvent XXII Annual Seminar.

Documents

annual seminar slide

annual mrsi seminar

affluence level

gurgaon decoding affluence

gurgaon research

loan disbursal

time of loan application

loan application form