The potential of micro loan products to reduce poverty has received wide acclaim in the literature. Nonetheless, some critics question whether these products have truly met the needs of the poorest of the poor i.e., `Bottom of the Pyramid' (BOP) customers. This paper argues that one factor contributing to any such failure in delivery is that formal micro finance institutions, such as commercial banks, non-government organizations and cooperatives, as well as informal traditional moneylenders, all suffer from a lack of basic marketing information about the BOP market. More specifically, in this case, the question is what is it that drives customers to select one micro loan product provider over another. In response, results from this study highlight that among others it is the institutional characteristics associated with image and reputation that are of paramount importance. These issues and related considerations are discussed in this paper.

The potential of micro loan products to reduce poverty has received wide approval. Indeed, the highest acclaim, perhaps, is the winning of a Nobel Peace Prize in 2006 by a Bangladeshi economist, Muhammad Yunus of Grameen Bank, for his significant contribution to the development of the microfinance sector.

In spite of the above reported success, critics have nonetheless questioned the effectiveness of micro loan product implementation. Datta (2004), for example, argues that while micro loan products have contributed positively to the well-being of the poor, they have failed to reach the poorest of the poor. Prahalad (2005) refers to these poor as `Bottom of the Pyramid' (BOP) customers. This paper argues that one factor that is contributing to failure is Micro Finance Institutions (MFIs), which lack basic marketing information about the BOP market. Specifically, what drives BOP customers to select a micro loan product provider over another. As a consequence, a product offered by an MFI that is inconsistent with what the customer is actually looking for, may result in the customer turning to Traditional Moneylenders (TMLs). The TMLs may offer quicker loans but often at higher interest rates (Mathul and Tsilikounas, 2004).

To address this issue, the study suggests that MFIs need to better understand how marketing and non-marketing stimuli impact on the customer's choice when selecting a micro loan provider. Taking this as the point of departure, the primary research objective of this study is to investigate what and how micro loan product specific marketing and non-marketing stimuli affect micro loan provider selection choice. This study was carried out in a relatively remote part of Indonesia: however, it is expected that the findings will be just as beneficial for other developing countries experiencing similar BOP customer characteristics, such as India, China, and those on the African continent.

Bank Management Journal, Micro Loan Products, Non-Government Organizations, Commercial Banks, Microfinance Sectors, Traditional Moneylenders, Communication Strategies, Financial Services, Rural Financial Markets, Communication Solutions, Micro Finance Institutions, MFIs.