Marketing guru Kotler takes a cue from SBI MF

Kotler highlights how a low investment amount of Rs100 introduced by SBI MF to reduce the entry barriers for the poor as it enrolled Rs100 daily wage earners as a part of its launch programme

Mumbai: In a first, SBI Mutual Fund has been mentioned as a case study in the 16th edition of the world-acclaimed book on Marketing Management by Philip Kotler, Jagdish N Sheth & others, which is a rare treat by the 'Father of Marketing'.

The fund house has taken a cue from the Management Guru CK Prahalad's book. 'Fortune at the bottom of Pyramid', which says that if we focus on middle and higher income group, then we can't create nation's wealth. Also, it explains that the world's five billion poor make up the fastest growing market in the world.

The fund house combined its expertise with presence of its parent State Bank of India (SBI) across the length and breadth of the country and uniquely poised to be the wealth creator for every Indian.

Investment in the equity markets or mutual funds (MFs) was never on the wish list of low-income households in small towns and cities. Such investment products were traditionally designed for the middle class and the rich. In 2009, SBI MF launched an equity-based micro-systematic investment plan (MicroSIP) to expand the market by reaching out to low-income savers. A low investment amount of Rs100 was introduced to reduce the entry barriers for the poor. The company enrolled Rs100 daily wage earners as a part of its launch programme.

Intermediaries including NGOs, self-help groups (SHGs), microfinance institutions were tapped to reach the target customers. These intermediaries helped SBI MF create awareness, acceptability and accessibility, the case study says.

Talking to Bizz Buzz, Dr Prashant Das, Associate Professor, IIM- Ahmedabad, says: "Around the same time when the US interest in mutual funds was booming (i.e. during the late twentieth century), India started witnessing numerous new mutual funds beyond UTI."

That SBI Mutual Fund secured a mention in the leading marketing textbook authored by such global authorities as Kotler and Sheth, testifies to the increasing appetite and sophistication of investors in India. Mutual funds are no more a constrained to the discipline of finance, but belong to a broader socio-economic narrative now, he added.

However, the study says, scaling up proved to be a challenge due to high acquisition as well as servicing costs. The learnings and experiences proved to be extremely useful when the company focused on bringing the benefits of capital markets to customers in tier-2 and tier-3 cities. New products, awareness campaigns and higher distribution coverage by leveraging SBl's branch network and offices enabled the company to attract new customer segments to grow the market. Products suitable for investors with lower-level risk appetites facilitated higher inclusiveness.

"There is a move towards stock market across various segments like tier-II and tier-III cities, metros and townships. In fact, the market has doubled from March 2020 to November 2020. As economies have started recovering globally, this proved to be a turning point for SBI MF. The reason was that they played their cards well through tier-II and tier-III cities. It played a major role in the fund house achieving the desired result," says Arun Kejriwal, founder, Kejriwal Research.

Adoption of local languages for mass media communications including outdoor, newspaper, radio, television and extensive deployment of below-the-line (BTL) marketing programmes improved reach. Increased physical presence in all cities and use of digital channels improved customer access, enabled virtual sales and enriched channel partner engagements. Simple and easy to understand videos on mutual fund products and investment solutions were used to educate customers as well as distribution partners.

G Pradeepkumar, CEO, Union MF, says: "SBI MF has done phenomenally well in reaching out to retail investors in India. Being included in the book by Philip Kotler is a great recognition of their achievements."

Training employees of the SBl's extensive branch network and engaging with the traditional distribution channel partners, while activating new partners boosted market creation. Now, customers in 99 per cent of postal pin codes across the country can easily access SBI MF. The fund house is actively trying to be the change agent for inclusive growth through financial services. All these initiatives drove SBI MF's assets under management (AUM) to achieve a breakneck compound annual growth rate (CAGR) of 37 per cent during 2017-21.

That SBI Mutual Fund secured a mention in the leading marketing textbook authored by such global authorities as Kotler and Sheth, testifies to the increasing appetite and sophistication of investors in India

- Dr Prashant Das, Associate Professor, IIM-Ahmedabad