Entering overseas markets
A Provident Financial case study

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Page 2: International marketing

There are a number of reasons why business organisations market internationally.
For example, the business within the UK may be mature or want to broaden its market base. In the mid 1990s, the directors of Provident Financial decided that the company should investigate whether there was substantial demand for home credit in countries beyond the British Isles. This was one part of a planned growth strategy for the group. The other element of the growth strategy was to increase Provident Financial’s customer base and its profitability within the United Kingdom.

Before entering any market, decision makers within organisations require answers to questions. Market research involves systematically gathering, recording and analysing data about the market for specified services. Senior managers at Provident Financial believed that there might well be a demand for small, unsecured cash loans in certain overseas markets. Early market research indicated that this was the case. The research also suggested that customers would welcome cash loans which could be provided in and collected weekly from their homes.

The opportunity

Provident Financial 5 Diagram 1The collapse of the Berlin Wall in 1989 had opened up the economies of many countries in Central Europe, such as Poland and the Czech Republic. However, even by the mid 1990s, citizens of these countries only had access to a limited range of banking and financial services. Provident Financial could offer a home credit product which was not currently available to customers in these countries. It was likely that home credit would prove attractive to people in these countries, because, unlike banks’ customers, Provident customers would not have to provide security – or guarantees - before small loans were provided to them. Finally, research among the company’s customers in the

UK had shown that customers liked the fact that the company’s agents could agree to provide them with loans relatively quickly and that the arrangements to take out a loan could be agreed in their own homes. In contrast to the home credit service which Provident Financial could offer, existing financial services companies in Central Europe did not offer such a flexible and convenient service to customers who wanted to borrow small sums of money.

Provident Financial | Entering overseas markets