Presentation is loading. Please wait.

Presentation is loading. Please wait.

PRODUCT DEVELOPMENT, MARKET EXPANSION AND PENETRATION DR. AKIN OGUNBIYI GROUP MANAGING DIRECTOR MUTUAL BENEFITS GROUP 1 C HARTERED I NSURANCE I NSTITUTE.

Similar presentations


Presentation on theme: "PRODUCT DEVELOPMENT, MARKET EXPANSION AND PENETRATION DR. AKIN OGUNBIYI GROUP MANAGING DIRECTOR MUTUAL BENEFITS GROUP 1 C HARTERED I NSURANCE I NSTITUTE."— Presentation transcript:

1 PRODUCT DEVELOPMENT, MARKET EXPANSION AND PENETRATION DR. AKIN OGUNBIYI GROUP MANAGING DIRECTOR MUTUAL BENEFITS GROUP 1 C HARTERED I NSURANCE I NSTITUTE OF N IGERIA 2014 I NSURANCE P ROFESSIONALS ’ F ORUM T ITLE A P RESENTATION BY September 11 th 2014

2 AN APPRAISAL OF THE NIGERIAN CONSUMER TODAY  Population>170million  Urbanization48%  Access to Internet>50million users  Telephone Lines100million lines  Growing use of social media- Facebook, twitter, google+  Informal Sector>70% of the population  Bankability1:9 formal to informal sector

3  Total Premium Income N350bn (2012/2013)  Contribution to GDP <1%  World GDP Ranking 23 rd (World Bank)  49 underwriters AN OVERVIEW OF CURRENT SITUATION

4 BACKGROUND 4 According to statistics released by NAICOM and NIA recently, Nigeria’s Insurance Industry now contributes 0.6% to Nigeria’s GDP after the rebasing of the national economy, a drop of one point from the earlier position of 0.7%. Non-life average growth in the last ten years is 22.1% and life, 24.3%. There is however, cheering news. There is appreciable increase in insurance patronage by the public and the various tiers of government stemming from innovations and improved services by the industry, increase in insurance education and awareness, and a more robust regulatory framework. Of course, we are still celebrating NAICOM’s enforcement of section 50 (1) and (2) of the Insurance Act on “No premium, no cover”. This has brought relative stability and confidence in the financial statements of the industry.

5 I want all of us to look the future in the eye and say: We are no longer foot soldiers in the march of progress, We are revolutionaries! Although, there is no crisis in our industry, we must use our capability to reinvent ourselves and our industry. Incremental improvement programmes are better than no improvements at all, but these are insufficient today when there is a yawning niche market space that we need to quickly fill. Our industry must yield new earnings growth and deliver sustained highly profitable growth. We must take evolutionary steps to achieve revolutionary goals. Our business concept and strategic initiatives must scale-up. We must embark on a radical shift from mere procedures to creativity. Instead of being reductionist in our competitive strategies, we should be expansive; inventive instead of extrapolative and inclusive instead of being elitist. 5

6 Let me summarize this introduction as follows:  Grow the insurance business through service-centred mass production and mass marketing  Provide sustainable competitive advantage through value-adding distinctiveness, competitive customer- focused capabilities  Up the ante to phenomenally adapt to unmet customer needs  Better and efficient business process with seamless IT infrastructure  Adopt competitive and best cost producer strategy for enhanced market share and salutary positioning.  Necessary investment in product development, market expansion for the long-awaited market penetration. 6

7 7 Product Development, Market Expansion and Penetration are three (3) key transforming coordinates that can be effectively engendered by our courage, boldness, dedication, perseverance, to achieve positive competitive moves. Product Development  Physical expansion based on careful research and identification of customers and their potential needs.  Creation and design of products to meet identified un-catered or not-fully catered for risk profile of sectors, groups or associations or individuals.  Tailor-made products to suit the needs of income brackets and specific/target groups  Deliberate value–additions as pragmatic response to identified needs, new markets and sophistication of consumers.

8 8 It is a strategic management process to achieve the following:  harness the fruits of innovations  replicate successful business patterns  generate profit and other benefits by identifying customer wants and needs and translating them to specified service deliverables  provide the desired market share within each identified market segments. Product Development Process To put an effective Product Development Process in place, you must monitor technology, competing pressures, customer purchase criteria, individual company’s capabilities, social, political, economic forces. Technical analysis, market analysis, timing and workforce profiling are key variables in decisions models. The Relative Perceived Value (RPV) of the products must also be taken into consideration. Screening criteria for RPV are customer values, individual company values and capabilities. Each market requires an integrated approach.

9 9 Positioning: This implies the mental image which a service project has on a target market in relation to the images of other services competing in that market. It is what you do to the mind, not to the product. It has the following characteristics:  an indispensable element in marketing planning and strategy for the company as well as for particular services.  practice segmentation– positioning in segments (segment dominance).  work around what is in the prospects mind  company and brand image– what does it connote (the service must perform the expected miracles in terms of value–addition)  your corporate name must be appropriate for the new service  superiority of a name over meaningless abbreviations- connotes value and essence of product.

10 10 Market Expansion This coordinate becomes useful as soon as you determine that sales to existing customers and markets have been maximized. In other words, when you have fully tapped your planned potential in a particular market; new markets that you can easily reach in terms of contacts, relationships, knowledge and experience can be considered. The “new” markets must clearly offer carefully researched and identified opportunities for sustainable sales and growth based on:  consumer needs and wants  product characteristics and to what extent they meet the needs  competitive market structure  consumer characteristics

11 11 Objectives of Market Expansion  to identify the consumer needs and wants  determine the degree to which the product characteristics meet these needs and wants  examine how the products may be modified or redesigned on new products created to increase the degree to which consumer needs and wants are met, while at the same time trying to minimize the impact of competing products/brands. The following are key issues in market expansions:  Target market: It is possible to estimate the potential of the market by estimating the expected demand based on the size and income and expenditure characteristic of the target market. Market analysis and associated activities which include marketing research are central to creating market opportunities. Also relevant are, market segmentation analysis and market potential analysis.

12 12  Product life cycle: This refers to the introduction, growth, maturity and decline of the product. Each stage characteristically faces relatively distinct problems of profit potential and competitive market structures.  Market segmentation: Identification of homogenous subsets of consumers that could be treated as target submarkets The accessibility of these subsets with distinct market mixes. Advantages ‐ understanding of the market e.g. knowing who the customers are and why they purchase the product ‐ identification of new opportunities that may be exploited ‐ enhancement of management’s ability to identify and plan for changing market trends.

13 13  formulation of rational media plans  identification of strengths and weaknesses of competitors and consequently the identification of segments that offer competitive advantages. Management has to formulate and monitor market mixes for different segments, which sometimes complicates decision making. Segmentation variables: these are price, quality, service, packaging, advertising etc.

14 14 MARKET PENETRATION SELL: -Existing products -Hybrid of existing products -Bundled products GROWTH Maximize potentials in terms of market share Market Penetration In the Nigerian marketplace, this growth strategy involves selling existing products, their hybrid or bundled products into existing/expanded markets to effectively grow market share. Effects of Market Penetration

15 15 DISTRIBUTION CHANNELS These compose of a linkage of institutions which collectively perform the essential functions to moving products from producers to consumers. It has two basic flows:  movement of services from the point of production to consumption  the informational flow both ways that precedes, accompanies and follows the product. These flows have 2 classes: deals with the purchase orders, invoices, payment for goods and all other transactions essential to exchange relates to the promotional information about the product or institution. The timing, economy, accuracy and clarity with which these flows are administered measure the efficiency of the channel.

16 16 The traditional channels for insurance sales and marketing are: ¬Insurance Brokers: ›controls over 75% of the established insurance markets {Corporate, Government, Complex Industrial and high profile risks}. ›about 600 registered ›over 3,000 unregistered The operation of the brokerage services in Nigeria presents a big limitation for insurance market expansion and penetration. ¬Insurance Agents: ›Agency network in the industry is very weak and statistics indicate less than 10,000 agency workforce. ›This is a veritable and most significant singular component of market expansion and penetration. E.g. South Africa, United State of America, India, Malaysia.

17 17 ¬Direct Marketing: ›pockets of sales from customers not going through any intermediary. ›experience in developed countries and the recent roles of information technology, telecommunications, social media, in transforming businesses in Nigeria; evidence of appropriate channels for insurance sales and marketing to achieve the objectives of NAICOM’s MDRI. Penetration and business process virtualization (BPV) is an established medium for mass marketing and substantial reach. Also, It is the application of intelligent network-enabled automation to leverage what you already have, people and their intellectual productivity, capital and infrastructure. It is a wonderful paradigm that enables the effective use of computer platforms, combined with enabling software and high-capacity networks to reach several multiples of market in a swift.

18 18 Effectiveness of the channel:  provides for physical movement and achieves the greatest economy  maximum effectiveness  optimum amount and quality of promotional information to all prospective buyers and provides an adequate feedback  has the flexibility to adapt creatively to company innovations.  is sensitive to each company’s role as it relates to the expectations of the other channel members. Media Relations as Strategic Platform  This platform (print and electronic) has first-hand intimacy with the much-needed publics.  No other medium offers comparable population (audience) size and breadth, day in, day out and also the range and depth of content.  Today, online additions and other innovative media products have, creditably expanded these “penetrating footprints”.

19 THE MUTUAL EXPERIENCE The kernel of Mutual Benefits’ impressive growth, is strict adherence to the company’s core values. We pride ourselves as unrepentant sticklers for Leadership, Professionalism, Knowledge, Continuous Training and Ethical Practice. As a result of the recapitalization exercise of 2006/2007, Mutual Benefits came up with the “Wind of Change”, our terms of engagement with stakeholders. The primary objective was fostering insurance as a vital financial instrument for national development through:  Repositioning and deliberate change in strategy  Clear and compelling brand promise  Superior and memorable services  Clear, competitive differentiation 19

20 20 Signposts of our approach include:  Products availability- 102 products; 36 approved by NAICOM in a scoop in 2014  Accessibility- 64 new offices opened in rural/remote locations  Products affordability  Employment Generation: over 7,000 Agents  Empowerment- strategic alliances, cooperative cells  Poverty alleviation  Income at the bottom of the pyramid: extensive involvement with the informal sector.  Consumer awareness: communication Rapport building Networking Positive attitude through professionalism

21 21 OUR RESULTS  Gross Premium Income: Average N1.2bn premium monthly  Unit Sales Volume: In 5 years, Mutual issued over 600,000 (six hundred thousand) individual policies.  ALL ON ALTERNATIVE MARKET EXPANSION AND PENETRATION INITIATIVES.

22 22 Conclusion The Nigerian Insurance Industry must maximally utilize or lap-on to clear and specific opportunities. We must continually move the ball forward to exploit the very large available distribution space. We must wrap-in this considerable large number of potential customers. We have a niche gap in this country that must be filled because no matter how an individual or organization sets its goals and executes its plans, the goals, at one time or the other, may be thwarted by unplanned events. Our industry, can professionally and effectively cushion or drastically minimize these fortuitous losses. We therefore have what it takes in terms of competencies to enable and ensure maximum profitability for organisations and lifetime successes for individuals as well as families. We must dream, create, explore, invent, pioneer and imagine in order to create new wealth and deliver sustained profitable growth.


Download ppt "PRODUCT DEVELOPMENT, MARKET EXPANSION AND PENETRATION DR. AKIN OGUNBIYI GROUP MANAGING DIRECTOR MUTUAL BENEFITS GROUP 1 C HARTERED I NSURANCE I NSTITUTE."

Similar presentations


Ads by Google