Life and Health Marketing (LOMA) - Chapter 11 - PRODUCT DEVELOPMENT
Product Innovations
- Major Innovations - new prduct that meets needs not addressed before by other products
- Start-up Businesses - new product for a mkt served by a similar product
- New Prroducts for Currently Served mkts - new product for co, but product avail from other cos
- Prodcut Line Extensions - new product forms adn items to existing product line to give customers wider choice
- Product Modifications - characteristic changed ot allow competitive advantage over similar prod
- Style Changes - alter appearances or tangible aspects (ie logo change)
Product Development Process
- 5 basic steps - after first 3 steps (each one) decide continue/abandon/refine
- Product Planning/Business Analysis/Tech Design/Implementation/Monitor & Review
- Product Planning
- Idea generation
- Screening
- two potential screening errors
- - potential of a good idea underestimated and idea rejected
- - poor idea looks deceptively attractive and pursuded, wasting resources
- may use a screening critera checklist to help objectively screen
- - compatible w/ corp goals and strategic inititiatives
- - will prodcut enhance copr image
- - does a need exist in target market
- - can current prodcut be modified to meet this need
- - will product generate new sales or shift sales
- - mkt potential large enough to generate enough business to make product profitable
- - can product be mkted through existing methods
- - support a level of commissions that will motivate slaes force
- - can current systems handle the product
- - will target mkts understand the product
- - would it be more attractive if offerred thorugh a sub
- Concept Testing - measures acceptability w/o actually producing items
- - helps determine how customers would compare product ot existing products
- - what sets of benefits/attributes customers like most
- - which ideas are unacceptable in the mktplace
- - which target mkt to taimfor
- Field Advisory Council - group of agents to test new ideas on for feedback
- Comprehensive Business Analysis
- Mkt Analysis - study of environmental factors that might affect sales
- - potential value of product ot customers
- - nature adn size of target mkt
- - potential value of product to company
- - nature of products competition inthe mkt
- - customer appeal of product
- - appeal of product to distributors
- - products relationship to other products offered by co
- - potential legal/regulatory problems w/ product
- - special tax considerations
- - economic considerations
- - product/company fit
- Product Design Objectives - products basic characteristics/features/benefits/issue lmits/u/w classes/etc
- Feasibility Study - operational & technical viability of producing/offering/admin of product
- Mktg Plan - outlined in C 5
- Prelim Sales & Fin Forcasts
- If analysis indicates good potential, product proposal prepared for mgmt
- Product proposal typically details
- - product objectives - product description
- - mktg strategy - mktg fit
- - fin fit - inv fit
- - systems fit - scope of product implementation
- - legal/regulatory
- Techical Design
- writing contract/actuarial assumptions/rate structure/benefit levels/issue u/w standards
- usually several revisions utnil compromise reached
- prod dev process flow/timeline/budget assembled
- all put together and presented to management
- areas involved
- Mkts/Distributors/IS/Actuarial/Investments/Admin/Acctg/Legal-Compliance
- Implementation
- establishing admin structure adn processes necessary to take product to market
- 3 concurrent activities
- - obtain necessary legal approvals
- - design promo & training materials
- - develop IS systems/procedure to mkt & admin product
- Policy filing - dynamic process b/c state variations
- Design of Promotion and Training Materials - product naem, sales lit
- need to get approval from legal on most materials
- some might need state approvals
- Systems Activities
- IS might need to buy/develop new systems to support product
- usually takes greatest amount of time in process
- Product Introduction
- offering new product for sale and having mktg and product support in place
- Intro sales kit
- - outline of product features and how they work
- - desc adn sample of policy and fin statement insured will get each year
- - table of issue and u/w limits
- - commission scales
- - table of premium rates
- - list of possible mkts
- - sample illustrations
- - saels presentations
- - suggested sales solutions for diff mkt situations
- - samples of local and national advertising to intor product to public
- - sample pre-approach letter adn/or postcards
- - booklet about product for producer
- - brocure about product to give to prospects
- - prospectus (if req'd)
- - sample app
- - details on promo campaign
- - privace disclosures
- - instructions on how to access website for more info
- Training classes
- Incentive prizes/awards
- Sales Monitoring and Review
- review PD cycle to see if time/budget met
- review sales to see if matching forecast - if not, attempt to determin why
- check fin results to see if goals met
- Product Modification
- - s/b systematic as development for new products
- - changes might occurr because of actual sales/profit experience
- Product Withdrawal
- sometimes necessary b/c of legal regs
- sometimes end of lifecycle or unprofitable
- may meet resistance from agents
- good to have an acceptable replacement product
- review portfolio periodically to see if anything should go