A MARKET ANALYSIS OF

PROVIDENT FINANCIAL

Coordinator:
Conf. Dr. Corneliu Munteau
Students:
Georgian Bcin
George Popovici
2010 Iai

TABEL OF CONTENTS

MARKET ANALYSIS .................................................................................................... 2

IDENTIFICATION & DESCRIPTION ......................................................................................................2
SEGMENTATION ...........................................................................................................................3
TARGETING .................................................................................................................................3
COMPETITORS ANALYSIS ............................................................................................ 5
IDENTIFICATION............................................................................................................................5
MARKETING STRATEGY PROFILE .......................................................................................................5
PRODUCT ANALYSIS ................................................................................................... 8
PROMOTION ANALYSIS .............................................................................................. 9
PRICE ANALYSIS .......................................................................................................11
PLACE ANALYSIS .......................................................................................................12
SWOT ANALYSIS .......................................................................................................13
SUGGESTIONS FOR MARKETING STRATEGY IMPROVEMENT ............................................14

PROVIDENT FINANCIAL
Provident Financial Romania is a non-banking financial institution (NFI) registered
by the National Bank of Romania, specialized in giving small amount loans on short terms.
Provident is the only financial institution in Romania that offers loans-at-home through an
additional service, extra-charged.
Provident Financial Romania started its activity in April 2006 through a pilot home
credit operation. The company is a part of International Personal Finance (IPF) which has
its headquarters in Great Britain. IPF is the international leader in providing consumer
credit at home.

MARKET ANALYSIS
Identification & Description
Consumer credit products are addressed to individual buyers that work based on
contracts and have only one source of income, the pay-check. The main priority of a lender
is to identify the capabilities of reimbursement of consumers.
Buyers of consumer credits are using the money obtained through this products for
purchasing retail goods, to finance other contracted loans or for supplement their daily
income.
Potential buyers of consumer credit are interested in the amount they have to pay
back monthly to reimburse the credit. When they do the actual purchase, buyers are
concerned about the level of interest-rate and commissions.
To access a consumer credit, buyers have to provide a set of documents from which
lenders can understand the financial situation of the buyers and to see if they are eligible to
obtain money through these products.
Between the years 2004-2008, consumer credit experienced a boom due to
loosening interest-rates by the banks and also an increase in the flexibility of contract
terms and conditions.

Segmentation
International Personal Finance used the geographical segmentation to divide the
market into different nations units. Today Provident is represented in countries like
Poland, Czech Republic, Slovakia, Hungary, Romania and Mexico and also maintain their
business in the U.K., where they have their central headquarters. They have established a
good position in the loans segment do to a series of factors like the emergent markets, the
potential of these markets, but also the entrance of these countries, except Mexico, in the
European Union, which boast rapidly growing, yet relatively underdeveloped, consumer
credit markets with further potential to growth.
In the Romanian market, Provident Financial used also a series of segmentation
strategy for allowing a better targeting, and in the end positioning of the product. They
used the geographical segmentation dividing its activities in Romania to the big cities of all
regions: Bucureti, Iai, Timioara, Constana, Cluj-Napoca, Craiova, Braov, Galai, Ploieti,
Sibiu, Trgu Mure, Piteti and Deva. These subsidiaries have to fulfill the regions they
represent and also the neighbor cities. In these regions there are different kinds of credit
consumers; for this they have divided the market using different variables.
Demographic segmentation called for variables such as age (under 18, past 18),
income (under 600 RON/person, 15 000 RON/person or more), occupation (managers,
craftspeople, supervisors, students, farmers, retired people, homemakers or unemployed).
Provident Financial make use of psychographic segmentation to divide the market using
the social class statues they have to select between lower class, working class, middle class
or the upper class.

Targeting
Because the company resources are limited, Provident Financial went for a large
share of a smaller segment or niche. Using this strategy the company achieved a strong
market position because of its greater knowledge of consumer need in the niche it serves
and the special reputation it acquired. It served the market more effectively by fine-tuning
its loans, its taxes and commissions to the need of the niche.

For its target market, at a national level, Provident Financial has chosen from all the
buyers of consumer credit products, those people who are in need of money on a short
term and possess low incomes per family and dont have any other legal ways to gain
money. In this kind of category we can find students, farmers, retired people, homemakers
or unemployed people who are in need of small amount of money for their day-to-day
living. This kind of people usually lack money, their income being under 600 RON. In terms
of age, Provident doesnt target a certain segment of age but it puts the condition that all its
customers to be older than 18 years.
Other characteristics of their market are regarding the psychographic variables.
Their loans are directed to the upper lowers, working class or middle class who are facing
money problems. Upper lowers are in need of money for their day-to-day living, the
working class for periods when they lack money and the middle class for some small home
investments.
In the minds of consumers Provident is being perceived as a financial product, a
loan which has the main advantage of being very accessible for all the categories of people.
Thereby most of the ex or actual customers are low-incomers. Another competitive
advantage is that the loans dont require, in most cases, any warranties. Most of their
customers do not possess any physical goods. An important service advantage is also the
loan-at-home management through which people interact in a different, easier way with
the Provident salespersons.
The full mix of benefits that Provident has attracts through a less for much less value
proposition. Because people cannot afford the best loan, the consumers settled for a less
than optimal performance loan in exchange for a lower price. Less for much less
positioning requires for meeting consumers performance at a much lower price. Provident
doesnt require warrantees but for these they offer small amounts of money.
Provident loan-at-home is an instrument very useful in managing households
budget. The service is addressed mostly to people who have an urgent need of money,
usually small amounts of money, and to whom the fix costs of the credit and the suitable
services at home are the most important and appreciated. One of the essential
characteristics of the Provident loan-at-home is the accessibility, the service being

addressed to people with moderate or low income, often refused by other financial
institutions.

COMPETITORS ANALYSIS
Identification
When it comes to competition, Provident Romania has to deal with two types of
competitors. There are some other non-banking financial institutions that are working on a
national level and some organizations that only exist on a local county-level. The main
competition on a national level comes from three companies: Cetelem, Simplu Credit and
TBI Credit. Referring to the local market of Iai, we have to add two more companies:
Express Credit, Amical Credit and Moldova Credit.
Figure 1: Provident competition
Nationwide

Localwide

Marketing Strategy Profile

Cetelem
Cetelem is the subsidiary of financial group BNP Paribas and number 1 in providing
consumer credits in Continental Europe. Cetelem started its activities in Romania on April

4, 2003 being the first company in Romania specialized on awarding consumer credits. In
Romania, Cetelem is the leader on consumer credit market.
Cetelem is providing loans through a product called Cetelem CNP. This product has a
time range between 6 and 120 months. People can obtain a minimum of 600 RON without
any endorsers or warranties.
Cetelem uses as promotional tools TV advertisement, newspapers, flyers, calendars,
posters and advertorials. A specific promotional tool also used by Cetelem is featuring ads
in partner stores. Cetelem has become recognized in Romania for the partnership with
Flanco, one of its most important collaborators.
Cetelem CNP can be obtained at yearly interest-rate of 16% with some additional
commissions: administration commission of 4% and monthly commission of 1, 04%. For
this product, the EAI is 37, 70% regarding a period of time of 10 years.
Consumer can access this product by dialing a phone number, available in all
networks. During the call, the buyer and the salesperson set the amount of money to be
loaned and the period of the credit. Then, money is sent into the bank account of the buyer.
Another way to contract a Cetelem credit is through the internet, this company being the
first to implement an online service for awarding loans.
Simplu Credit
Simplu Credit is a non-banking financial institution which delivers financial
consultancy services and loans offer for individual buyers. The company is one of the
youngest NFI, being authorized by the National Bank in 2007.
Simplu Credit offers loans to individual buyers who are experiencing short term
financial difficulties. Buyers can obtain up to 5 000 RON on a period of reimbursement of
36 months.
The promotion strategy of Simplu Credit is being focused on newspaper ads. People
find in the newspaper an ad that contains a phone number, few details about the loan and
the costs of loan.
For a credit of 3 000 RON on a period of 24 months, the monthly payment is 187, 54
RON and the total amount to reimburse is 4 680 RON. The yearly interest-rate is 19, 9%,
fixed percent, and EAI is 62, 45% for 2 years.

The product is distributed to customers through a phone service. Simplu Credits

salespeople are taking calls from customers and provide all the details necessary to sign a
contract.
TBI Credit
TBI Credit has been present in Romania since March 2002 being the loan division of
TBI Leasing. In the present, the company reached a network of 70 subsidiaries in all the big
cities and 150 work-points in partner stores.
The consumer credit offered by TBI Credit it has a variable value between 300 and 5
000 EUR. The loan can be contracted on a period of maximum 60 months.
TBI Credit is promoting its products through the online website and through
different sponsorships in sporting events, newspaper ads.
In the case of TBI Credit, the interest-rate and period of time varies according to the
needs of customers.
After the salespeople and the buyers settle on the terms of the contract, TBI Credit
sends through messenger the loan contract on physical support. After the company receive
the signed contract, it sends the money via bank transfer into the clients account in
maximum 5 working days.
Express Credit
Express Credit started as Electro Gold in 1999 and re-branded its image in 2008,
expanding its network to 9 neighborhoods in Iai.
The loans offered by Express Credit require physical warranties like automobiles,
jewelry, electronics or home-appliances. The loans are offered on a period of maximum 30
days with the possibility to extend to 45 days.
Express Credit promotes its products through video ads in public transportation,
newspapers ads, flyers placed in postal boxes or posters placed in the city.
According to the amount of money loaned and the warranties presented, the daily
commission varies between 0, 8% and 0, 2%. For example, for a loan of 1 500 RON
warranted with jewelry, the customer has to pay a commission of 0, 4% per day.
The loans can be contracted in Express Credit shops that exist in different parts of
Iai.

Amical Credit
Amical Credit was created in Iai, in 2000, as a local non-banking lender which
provides short-term loans. The loans are based on physical warranties brought by the
clients and in return for this, the customers receive money up to 3 000RON. According to
the warranties, customers have to pay different commission ranging from 0,2% to 0,5% per
day. The loan can be obtained on a period from 5 to maximum 30 days.
As a promotional tool, Amical Credit is offering the first day of the loan free of
charge.
Loans contract can be signed at one of the companys 4 agencies. This are set in
different parts of Iai, offering a wide spread of the product.
Moldova Credit
Moldova Credit operates in the city of Iai since 2006 as a non-banking financial
institution and offers loan services to individual buyers depending on their financial needs.
Moldova Credit is offering a loan product to people which have a stable job for more
than 3 months and to retired people not older than 75 years. The loans require warranties
like mortgages or deposit at Moldova Credit Iai.

PRODUCT ANALYSIS
Provident is a low-amount loan on short term with no endorsers nor physical
warranties. The collection and receivement of payments is realized through bank transfer.
The buyers receive the money in maximum 12 days from their solicitation and they have to
make proof of an existing bank account, opened in RON, on their names, at any existing
bank from Romania.
New clients can take an initial loan from 400 to 2 500 RON on a time frame of
maximum 56 weeks while existing clients can solicit up to 30 000 RON with no warranties.
Total cost of a loan is being established through a transparent loan contract. In this way,
clients know from beginning the total amount of money they have to pay and the method to
reimbursement. There are no hidden taxes or commission thereby the clients are sure that
the amount of money loaned will not increase if they are unable to make the payments
established through contract.
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Loan-at-home Service
Provident is the only financial institution in Romania which offers a service of loanat-home management. Through this service, extra-cost, the loans can be awarded in
maximum 48 hours by the companys salespeople. They visit the client at home every week
to collect the payments afferent to the loan.
The loan-at-home management is based on a business model tested, fundament of
130 years experience in Great Britain being utilized by the mother-company, in all the
countries in which IPF extended its operations.
Because the salesman has a weekly encounter with the client, he will have the
capability to offer flexible solutions for every financial difficulty of the client, through
simple readjustment of his payments schedule. This is being made with no extra costs;
thereby this is one of the reasons why buyers are appreciating the loan-at-home
management.

PROMOTION ANALYSIS
Provident can make its distribution channel to make loans and services available to
customers in different ways. Provident uses also the direct marketing channel but also the
indirect marketing channel. First of all, are the employees of the company that are
answering the phone when potential buyers call to ask about a loan and gives to this client
all the details they require. In present, Provident has a number of 550 employees. Also, the
sales force of Provident is completed by the 2 500 independent representatives. These are
people who signed a collaboration agreement with the company and they are doing field
work. This means that they are the ones that travel to future customers homes and present
to them the benefits and terms of Provident loan-at-home. Some of these field
representatives are former customers of Provident who saw the advantages of this
company and decided to enter its sales force.
To promote its products for consumer credit, Provident Romania uses different
methods to reach potential buyers. The promotional mix of Provident consists of
advertising, sales promotion, personal selling and direct marketing tools that the

company uses to persuasively communicate consumer value and build customer

relationship.
Provident promotional tools imply advertising through TV media, Internet, print,
newspapers ads and flyers delivered to postal boxes of potential customers. Also, Provident
pays a lot of attention to its sales force by transforming a lot of customers into sales
representatives.
When it comes to TV advertising, Provident uses three commercial ads to create
buzz among potential customers. In each of the ads, you can see typical situations from
the life of a family when it encounters a money problem. The TV commercial are standard,
30 seconds long, but manage to send a powerful message to customers that Provident is the
help they need to overcome some short term financial difficulties.
Beyond its reach, TV advertising says something positive about the companys size,
popularity and success. This type of advertising is very expensive, that is why the Provident
uses also newspaper or radio advertising, which can be done on smaller budgets.
Personal selling is another promotion tools used by Provident. In fact, personal
selling is the most effective tool in selling loans to people and also building customer
relationship. It involves personal interaction between the Provident salesperson and the
potential buyer of loan, taking place at the office but in most cases at the buyers home.
Sales promotion is also another technique used by Provident. It is being used mostly
in the so called dead periods of the year, when the sales of loans are below the usual
times.
Provident is also being active in the social and public relations. The company started
a ecological program called (Re)Build the story of your park which is taking place at a
national level in 3 big cities: Cluj Napoca, Iai and Galai. For example in Iai 30 voluntary
people of Provident have participated on the 2nd of October at the replanting of Ciurchi
Park in the Ttrai neighborhood. The advantage of the public relations is that the
message gets to the buyers as news rather than as a sales-directed communication, it is
very effective and also economical.
Another way to promote Provident is by direct marketing using the telephone,
direct mail, e-mail, online marketing (website).

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In the last, Provident Romania had an intense campaign of promoting its loan
products. For that, the non-banking financial institution has aired 985 advertising
insertions in written media, radio and TV broadcasting. Provident took advantage of the
financial crisis, which made the loan awarding conditions more harsh, and undertaken a
strong campaign on all communication channels to familiarize the population with the
loan-at-home service.

PRICE ANALYSIS
For obtaining a loan, the solicitant has to make proof that he or she lives at the
address stipulated in the identification card and to present a document which will make
proof of their stable income. The minimum income available of the solicitant has to be at a
minimum of 270 RON or 540 RON per family. With this low income, the solicitants can
obtain a loan of 400 RON on a period of 26 weeks or 550 RON on 39 weeks.
The typical loan is 1 000 RON for a period of 39 weeks, in this case buyers will pay a
total of 1 677 RON in weekly payments of 43 RON each. The Effective Annual Interest (EAI)
of Provident loans varies between 237% and 437% according to the period of loan
reimbursement. EAI is not a relevant indicator for the loan-at-home because the level of
EAI is being influenced by the period of loan reimbursement which very low in the type of
credits.
Although the price may be seen as very high, the cost of Provident loan-at-home
reflects all the advantages of this service: the signing of contract and the payments are
made directly at the buyers home. Other financial institutions, along with interest, they
also require a series of commissions, like awarding commissions, analyzing commissions,
and administration commissions. In the case of Provident loan-at-home there are no
hidden taxes or commissions, the cost being fix and all the extra charges being included.

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PLACE ANALYSIS
Provident Financial is using a large sales team to deliver its products to individual
buyers. For distributing its loans, Provident uses two types of channels: getting in contact
with customers through phones and sales representatives of Provident are going directly to
the buyers home.
When we refer to the first channel, through phone, one of Provident salespeople is
receiving a call from potential customers. In this talk, the salesman and the buyer settle on
the term of the loan contract: amount of money loaned, time period of the loan, amount of
weekly payments, customers bank account to where is realized the banking transfer. After
the loan contract is approved, the money is sent into the clients bank account. After that, in
every week the client has to send, also by bank transfer, the weekly payments to reimburse
the loan.
The second type of channel used by Provident is by delivering the money directly to
the customers address. In this case, one of Provident sales people goes to the customers
home and has a talk with him regarding all the terms of loan contract. After deciding on
these terms, the customer has to wait 48 hours for the loan to be approved. When the
approval is made, the same sales people come with the money from the loan and it hands to
the customers. Also, this service implies that the sales representative has to come every
week, during the entire period of the loan, to collect the payments that are needed to
reimburse the loan.
This distribution channel that implies delivering the money directly to the clients
home was implemented first time by Provident and gives them a competitive advantage
over other competitors.

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SWOT ANALYSIS
Figure 2: SWOT Analysis for Provident
STRENGHTS

WEAKNESSES

Small number of documents to

contract a loan;
Flexible regulations;

Fixed, non-hidden costs;

Powerful

experienced

sales

No partnerships with retailers;

Short period of reimbursement;

THREATS

Increase market share after the

Low-confidence

Bad publicity created by unsatisfied

customers;

in

banks

drives

population to non-banking financial

New

competitors

entering

the

market;

institutions;

with

Powerful mother company;

financial crisis;

compared

Can offer loans up to 2 500/30 000

OPPORTUNITIES

EAI

RON, depending on the customer;

team;

high

financial institutions;

and

Very

In time, some customers become

High competition on local market

due to loan sharks

sales representatives;

The appearance on loans contracted

online;

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SUGGESTIONS FOR MARKETING STRATEGY

IMPROVEMENT
Regarding first at the product characteristics, a major problem for the loans offered
by Provident is that the EAI is very high, this making the product accessible at a higher cost.
With the EAI it is the risk that the customers will move to other non-financial competitive
institution which offer the same loans and conditions but with a decreased rate of EAI.
Also speaking about product characteristics, the amount of money that can be
loaned is small. This can damage the capacity to cover the market and some potential
clients how are in need of a higher amount of money will move their attention to other nonfinancial institutions that have the ability to loan them more money. Probably a solution to
this can be the acceptance of warrantees or mortgages that can make Provident loan a
higher amount of money to their clients. This solution could also leave to an extension of
customers by attracting also other kind of customers with higher incomes, occupations or
social class.
In the promotion segment there are also some problems. Unlike competitors who
have signed contracts with retailers or wholesalers, Provident has also the same
intermediarys strategy but not retailers. They have intermediary people in different
locations who try to fulfill the geographical region. The disadvantage is that these
intermediaries dont have the same influence and awareness like the retailers. In a home
appliance shop the buyers are attracted to make loans for the bought product direct from
shop then moving to a financial institution.
In a developing new ways of contracting customers and loans Provident has to find
all the time new ways of fulfilling the market. They have to be present in all the places,
including internet. The competitors have profited that the company doesnt offer yet online
credits and have moved a step forward in being closer to covering the consumer needs by
offering this kind of way to contract credits. Provident doesnt have yet any online credits,
but the first step has been made. After seeing the conditions to contract a loan from
Provident, the potential customers can make an online solicitation and after that they will
be contacted by a salesperson.

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