1. Designing Products To Meet Consumer Needs Contractual Savings Conference May 3, 2002 Craig Alvey Nationwide Global

2. Agenda  The Product Development Framework  Drivers of Product Design  Customer Needs

3. The Product Development Framework

4. Drivers of Product Design External  Legislative and Regulatory  Economic Environment  Distribution Requirements  Customer Needs  Competition Internal  Strategic Goals  Profitability  IT Capabilities

5. Customer Needs  Identify the Customer  Segment Customer Groups  Define Needs of the Target Segment

6. Example: US Employers Sponsoring Defined Contribution Plans Trends in Product Customization Choice Personalization

7. Current Trends  Expanded investment options  Increased access to information  Availability of transaction capability (24 / 7 / 365)  Increased education and investment advice

8. Segmentation: Desire for flexibility increases with plan size while the need for “handholding” begins to diminish Less than 50 employees 51 – 100 employees 101 – 250 employees 251 – 2,500 employees 2,501+ employees

9. Example of a Customer Segment’s Needs / Expectations 51 – 100 employees  May have a person semi-dedicated to overseeing the plan  Education is the key selection factor  Ease of administration is mandatory  Accurate and time recordkeeping required  Multiple fund families  Internet  Brokers, agents, other intermediaries

10. Expected Future Trends  Pace of change will not slow down  Influenced largely by individual participants  Service customization and choice  Choice and control  Self directed brokerage accounts  Open architecture product design customer driven

11. Example: Individual European Customer Needs  Private retirement savings needs (State pension systems struggling to support growing population)  International or U.S. company only with local presence  Conservative investment options  Insurance cover:supplemental income death benefits  Call Center with hours beyond traditional business day

12. Customer Needs  Clarity and transparency (taxes, fees and charges)  One-to-one relationship with trusted advisor  Assess internet account information (not in place of paper reports and transactions  Advisor should be knowledgeable, experienced and technologically savvy  Product Provider should be well known, stable company with strong financials

13. Risk and Investing  Savings viewed as short-term  Investment implies longer-term (future)  Consumers trust individual, as opposed to specific companies  More financially sophisticated tend to trust advisor less  Current desire for conservative investments  Quality versus quantity of investment options

14. Leads to Identification of Product Design Options The Customer’s Ideal Unit Linked Product Company Multinational, well known Western Europe Must have local presence and abide by local laws Fees Appropriate to insurance level and range of funds

15. Product Design The Customer’s Ideal Unit Linked Product  Seen as an investment product with minimal insurance components  Offer at least a death benefit which equals a return of premium  Other components may be added as individual prefers (“modular approach”)

16. Product Design The Customer’s Ideal Unit Linked Product Funds Quality, not quantity Offer local, European, and Global/US funds Service Opportunity for face-to-face Internet access Fund switches at least monthly Electronic and paper transaction confirmations Quarterly and annual statements

17. Product Design The Customer’s Ideal Unit Linked Product (cont’d) Call Center Staffed with knowledgeable representatives Act as conduit for provision of advice and execution Open beyond normal office hours

18. How To Identify Customer Needs Ask Them Concept Test Surveys Secondary Information Competitors’ Designs

19. Conclusion  Drivers of Design  Strategic Goals  Product Design  Test and Monitor