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NEW PRODUCT DEVELOPMENT

CASE ASSIGNMENT- 2
GROUP K

ARCHANA T (1311358)
BHASKAR JYOTI SAHA (1311221)
JOYDEEP PAUL (1311021)
PREETHI VENKATARAMAN
(1311313)
BASKET OPTION: BEYOND INVESTMENTS
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EXHIBIT 1- INTEGRATION OF MARKETS, PLATFORMS
AND COMPETENCIES FOR BASKET OPTION
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BASKET OPTION- THE STORY SO FAR:

Basket Option is a major player in the Indian financial services brokerage and the
complementary financial education industry. Financial services have been an esoteric
subject in India, and hence the market has been an underdeveloped one. By introducing
some services viz. Stock Market Institute and student insurance, and by simplifying
some others viz. claim processing and education loans, Basket Option has been able to
create new market segments. Basket Options success has been based on its ability
to address customers needs by packaging services as easy to use products. In the
(Indian) financial services industry, ease of use generates trust which is a critical
success factor for any financial product. Any cumbersome, time consuming process
leads to apprehension among most customers. By becoming a committed middleman
who offers best pricing and transparency, Basket Option has been able to earn trust
and credibility. Also, it has enhanced its reputation by offering unbiased financial
advice through the Stock Market Institute and the Street Smart software, which
demonstrate its intent to educate its customers, rather than exploit their ignorance.

The barriers to entry in the financial services industry is very high (7-10 years) due to
path dependence (reputation and trust). So, rivalry is low for most of the products. This
leads to high bargaining power of suppliers. Bargaining power of buyers is low (due to
ignorance and lack of options). In this supplier dominated industry, Basket Option has
tilted the balance in the buyers favor to some extent, thus increasing the market size
and gaining good reputation and trust. It should now leverage this critical resource to
further improve its customer base and cross sell newer products. Its culture of low risk
introduction of new services among Basket Option customer subset through
entrepreneurs and intrapreneurs heading the established verticals, should be carried
forward which can help cut down on potential losses.

Exhibit 1 depicts the markets, service platforms and core competencies of Basket
Option.

RECOMMENDATIONS:

Basket Option is riding on the crest of success with its wide array of innovative financial
service offerings. The company has recovered from its initial losses and has been
maintaining steady bottom line growth for the past few years through its viable and
profitable new business models.
However, we feel that the customer base for the existing verticals like insurance, wealth
management and education loan need to be expanded even more. They can also
enhance the scope of their existing services to attract more customers and also focus
on new service launches, which are aimed at addressing customer pain points with
respect to existing financial products. In this regard, we propose the following:



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1. Expansion of Customer Base for Existing Verticals:

i. Introduction of Customer Loyalty Program and Package Deals:

Customer loyalty program shall provide benefits to existing customers and thus
encourage loyal buying behavior as well as promote other services offered by Basket
Option. Basket Option can offer a range of loyalty rewards and package deals, in
collaboration with insurance firms. For example- as loyalty reward, a customer availing
more than 2 insurance plans, can get discount on monthly premium. Also they can
promote insurance package deals like life insurance, health insurance, vehicle
insurance combined with complimentary one time travel insurance free of charge.

ii. Introduction of Customer Referral Programs:

The majority of Basket Options customers are satisfied with its services. To leverage
this aspect and grow its customer base, Basket Option can launch referral programs
and reward customers based on maximum new prospective customers, he or she
brings. This is very relevant in this industry as people look for trusted avenues to invest
their hard earned money. Here, word of mouth marketing from relatives, friends and
neighbors is invaluable.

In addition to the above, Basket Option needs to boost its presence and marketing
efforts in social media websites like Facebook and twitter in order to effectively tap the
large user base of these social networks. They need to be where their customers are
and not wait for the customers to come to them. We also recommend digital marketing
through advertisements in smartphone applications, website featured ads etc.

2. Enhancement of Scope for Existing Verticals:

i. Income Tax Filing Service:

Basket Option already has kiosks in corporate offices which run the Street Smart
software and help maintain investment data. The software in the kiosks can be
upgraded to include Income Tax filing services as well, during the Income Tax filing
period. This will help reach out to more customers without much extra investment.

ii. Investment Opportunity Awareness Program for Professionals:

The corporates who have tied up with Basket Option for Street Smart can be provided
with awareness programs / workshops for employees at the beginning of the financial
year to help them initiate the investment cycle. This is different from what Street Smart
provides currently, as this will help investors do due diligence and then arrive at an
investment option. The unbiased investment advice will help employees make correct,
informed choice regarding their investment- they will take into account their past
personal data, rather than being focused on some product and then checking if and how
that can be included in their portfolio. This will lead to better planning and higher long
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term benefits. Ratings for investment options can be provided by Basket Option, based
on payoffs and risks. Workshops can also focus on post retirement income flow options,
safeguarding emergency expenditure, and childrens study and development options.
Basket Option can charge the companies for conducting the workshop.

3. New Service Launches:

i. Loan and Insurance Services for Rural Customers:

Rural India has very poor inclusion for financial services by the organized sector and
hence money lenders and chit funds enjoy thriving business at the cost of
impoverishment of the poor population. There is huge unmet demand for loans in order
to set up new business, buy crop seeds and insurance for farm equipment, livestock
etc. Basket Option can bridge the gap between loan / insurance service providers and
rural population by organizing the asset information of individuals, doing necessary
documentation formalities on behalf of insurees and facilitating availing loan / insurance.
This will help fulfill the demand as well as further socio-economic development. It will
also bring in a social dimension to Basket Options business and thus generate
goodwill; particularly in this industry, trust and reputation are priceless.

ii. Provident Fund and Pension Claim Management Service:

Provident Fund and pension claim is a tedious and time consuming process especially
for government employees. Basket Option can address this pain point by coming up
with a dedicated claim management service which can be availed in exchange for
nominal service fee.

iii. Unemployment Insurance:

With recurrence of economic downturns and Hire and Fire policy becoming the order of
the day for big MNCs, job security is at all-time low. Unemployment insurance covers
monthly expenses for fixed duration in case of loss of employment and this service is
already provided by some insurance companies in India. Basket Option can promote
unemployment insurance by bulk selling to corporate employees- insurance premium as
well as risk of the insurance company will be highly reduced and result in popularizing of
the service.

iv. Claims and Payroll Management Service for SMEs:

Many small and medium companies incur a lot of cost in setting up payroll / claims
departments to process these functions even though the requirement exists only at
specific periods in a month. Claims and payrolls processing are standalone business
processes in most companies, separate from the core business. So these can be easily
outsourced to a third party. Basket Option can offer this service to these companies in
exchange of fees, which would be a win-win for both. Its existing corporate client base
for Street Smart can be the launch-pad to test out the feasibility and operationability of
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this service. If implemented, Basket Option can integrate the payroll and investments
(extend Street Smart to integrate investment data with payroll data) of the employees of
that organization. This will make the process more robust and easy to maintain.

v. Debt Management Service:

The debt management service is targeted towards customers who have taken loan. It
helps plan monthly installments for paying off debt, based on income, household budget
and other commitments. Also in case of multiple creditors, an individual can pay single
amount of money to Basket Option, which will be divided and paid to all the creditors as
monthly installment- customer has single point of contact and is spared from dealing
with multiple banks. Nowadays majority students entering employment have education
loans to repay. Basket Option can step in as financial advisor for this segment of
customers and will have record of their creditworthiness. It will build trust, generate
referrals and help sell other loan and insurance products.

WAY FORWARD:

Basket Option founder, Abdul G. Sait believes that the future will not be about being big
but about speed. Basket Option has diversified its business into many verticals at an
impressive pace and also been successful in steady growth of profit for the past few
years. However, in order to fuel its fast evolution of business, Basket Option needs to
generate more revenue from the existing verticals and also needs larger base of
satisfied customers, who will be willing to try new services offered by them. The
company should reap the benefits of its strong network and trust, goodwill of customers
for this purpose. For financial advisory consultancy based services, Basket Option
should recruit experienced personnel and young, dynamic personnel dedicated for
insurance and loan products. Knowledge management and training of employees shall
play a significant role for the company. While launching new services, Basket Option
should be careful to remain a focused player and not deviate from its core competence
and resources. Going forward, Basket Option should extend its geographical reach after
substantial market research and also bring rural India into the fold of its service
offerings.

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