Urban marketing succeeds using different product development

CHICAGO … Companies that succeed in urban markets are most likely to have a different product development and delivery process, according to marketing experts.

Urban or emerging markets customers and agents have different needs, and companies must do careful research and analysis. If they simply rely on their current product development and distribution models, they may fail.

“In this market, companies must take a close look at the customer first, and not what the company wants to sell,” said Werner Kruck, president of Kruck Consulting, a Cincinnati- based insurance marketing firm. “Many companies will start out with their standard policy and think of how they can market the policy to an urban customer, without thinking through whether the customer wants the product. This leads to missed opportunities or worse.”

Insurers are not alone is making this mistake. Banks assumed that urban customers wanted all the same banking services as their other customers, and failed to realize that among some market segments, customers needed money transfer services. As a result, banks missed out on a highly profitable money transfer business, and are now retooling to accommodate that need.

“Don’t make the mistake of limiting your ideas,” continued Kruck. “Start with customer needs and involve your whole company in the process. Remember that your product is the sum total of the customer’s experience with your company.”

“It is also important to realize that your company’s brand value means different things to different people, and their perception is influenced by their cultural background,” added Daniel Sullivan, president, DJS Sullivan and Associates, a Chicago-based marketing firm. “For some groups, financial stability may be important, whereas for others, how long your company has been in business counts more.”

This evaluation process extends to agent recruitment and development, where companies may need to rethink how they work with urban agents.

“Agent training, beyond continuing education courses, is key,” said Donald Lewis, president of Insurance Cooperative, a Philadelphia-based agency network. “There are some agents that use the ‘take all comers’ approach, and those that are already using standard carriers’ underwriting.”

“There is also a middle group of agents who can move into the standard carriers’ criteria if they receive some additional training,” continued Lewis. “But many of them are afraid to ask. This is similar to the student in class who doesn’t ask a question because he is afraid he will be considered ignorant, but in fact, many other students also want to know the answer.”

“The good news is that companies which execute a solid urban markets strategy can and do succeed,” said Michael Yeager, president and chief executive officer of Lehigh Mutual Insurance Company. “We instituted an urban markets strategy, and it is a profitable book of business.”

These experts will be speaking at the third national Urban Insurance Advantage workshop, which will provide life, personal lines, and commercial lines insurers with the tools they need to compete successfully in the urban marketplace. Pennsylvania Commissioner Diane Koken, New Jersey Commissioner Holly C. Bakke and Illinois Director Anthony Clark will also be speakers.

“Don’t limit yourself to ideas you think will fit into the existing regulatory framework,” added Kruck. “Regulators want the market to be served, and if you have a new product idea, talk with them about why you think it will benefit the customer.”

Consumer group supports nation-wide, multilingual education on the insurance industry’s use of credit reports

CHICAGO … Consumers would benefit from more information on insurance, including how insurers use credit, according to Ken McEldowney, executive director of Consumer Action. Consumer Action is a nationwide consumer education and advocacy organization that works with over 7,000 local civic, consumer and community organizations. Consumer Action annually distributes over 2 million educational brochures in English, Spanish, and Asian languages.

“Consumers are becoming increasingly aware of how financial services can be used to improve their lives, and they are becoming better educated about important topics such as credit,” said McEldowney. “We therefore encourage the insurance industry to develop nationwide, multilingual education programs so consumers will understand the role credit and credit reports play in decisions made by insurance companies that affect them.”

McEldowney will speak at the October 28-29, 2003 Urban Insurance Advantage workshop, organized by the Urban Insurance Partners Institute (UIPI), where he will also talk about Consumer Action’s recent partnership with Capital One, a financial services company. This program has thus far produced over one million consumer brochures covering topics such as the importance of credit, basic banking, budgeting and how to improve your credit score.

“Consumer education has long been a UIPI priority,” said Sue Johnson, vice president, GeneralCologne Re and UIPI chairman. “We are interested in learning how our industry can reach a broader audience.”

“We are opening a dialogue to see if there are ways in which insurers can work constructively with Consumer Action,” added Suzanne Reade, UIPI president.

The third national Urban Insurance Advantage workshop will provide life, personal lines and commercial lines insurers with the tools they need to compete successfully in the urban marketplace. Urban markets specialists will cover current topics in marketing research, product development, performance measurement and building a corporate team. Pennsylvania Commissioner Diane Koken, New Jersey Commissioner Holly Bakke, and Illinois Director Anthony Clark will speak on regulatory issues.

Insurers have inaccurate data for urban markets

CHICAGO … According to a recent analysis by MetroEdge, a Chicago-based market research and consulting division of ShoreBank, insurers are missing billions of dollars in urban business because they lack accurate database tools. MetroEdge is completing a gap analysis that will be presented at an October 28-29, 2003 workshop on urban marketing in Chicago.

“Traditional segmentation tools that attempt to size the market and identify distinct customer preferences have limited use in urban markets,” said Darice Wright, director of financial services for MetroEdge. “Most database services will have three to four market segments for urban markets, whereas companies really need at least a dozen segmentations to market efficiently.”

Moreover, traditional databases used by many financial services companies typically underestimate the market, partly due to underreported income that traditional database companies do not take into account.

“ To adequately size this market you must ask the right questions in the right context,” explained Wright. A recent MetroEdge analysis of low, middle and high income market segments showed that each segment makes about the same amount of annual consumer expenditures—about $1 trillion each.

MetroEdge is focused on providing specialized market intelligence on customer segmentation, product mix and delivery strategies for urban marketing initiatives. MetroEdge’s clients include national retail companies, financial institutions and various city and local governments.

The third national Urban Insurance Advantage workshop, organized by the Urban Insurance Partners Institute (UIPI) is designed to provide life, personal lines, and commercial lines insurers with the tools they need to compete successfully in the urban marketplace. Urban markets leaders will cover current topics in marketing research, product and agent development, performance measurement and building a corporate team; and state regulators will discuss current urban market regulations.

Effective multicultural initiatives yield big results

CHICAGO … Insurers that launch an articulate emerging markets strategy can realistically expect agent productivity increases of over 50 percent, and dramatically better results than their “normal” business, according to Andrew Nuttney, a principal in the New York-based Research and Advisory Group. The firm specializes in urban marketing, and counts among its clients a number of large financial services companies.

“However,” emphasizes Nuttney, “the problem is that only a few of the many diversity strategies now in place can be described as articulate, or to be blunt, successful.”

Nuttney will be a speaker at the October 28-29, 2003 Urban Insurance Advantage workshop, which is organized annually by the Urban Insurance Partners Institute (UIPI), a nonprofit insurance industry group. He will discuss the results of his firm’s recent research on emerging markets strategies and results.

“Despite these shortcomings, many of the firms surveyed report dramatically better results than in their regular business, “ continued Nuttney. “Based on our research, we expect that absolute returns from multicultural initiatives in financial services should yield between 15 percent and 100 percent greater profitability, after incremental investment, relative to regular business. This is partly due to the pent up demand for a variety of insurance products.”

Nuttney will discuss analytic frameworks at the workshop, which will help company managers set clear metrics and transparent objectives. “One key element that we often find lacking is a clear understanding of ROI standards and objectives,” concluded Nuttney.

“This research offers tremendous value to urban markets professionals,” notes Gwendolyn Jones, director of emerging markets for American Family Insurance and chairman of the Urban Insurance Advantage workshop.

The third national Urban Insurance Advantage workshop, held in Chicago, will provide life, personal lines, and commercial lines insurers with the tools they need to compete successfully in the urban marketplace. In addition to the urban markets performance session, urban markets specialists will cover current topics in marketing research, product development, agent development, and building a corporate team.

Pennyslvania Commissioner Diane Koken will join Holly C. Bakke, Commissioner of the New Jersey Department of Banking and Insurance, in a regulatory affairs panel. The panel will be moderated by former NAIC president Bruce Foudree, now an attorney at Lord, Bissell & Brook.

Commissioner Holly Bakke to address insurers on urban markets issues

CHICAGO … Companies seeking to do business in urban markets must take the long view, according to Holly C. Bakke, Commissioner of the New Jersey Department of Banking and Insurance.

“There is good business in urban markets such as New Jersey,” said Bakke. “However, it is a diverse market, and we encourage companies to tailor products and services to serve a variety of market segments. Companies may need to adapt their business models in order to be successful.”

Bakke will be a speaker at the October 28-29, 2003 Urban Insurance Advantage workshop, which is organized annually by the Urban Insurance Partners Institute (UIPI). The regulatory session will be moderated by Bruce Foudree, who is a former president of the National Association of Insurance Commissioners. He is currently an attorney at Lord, Bissell & Brook.

“New Jersey is a large market,” noted UIPI President Suzanne Reade, “and we look forward to hearing Commissioner Bakke’s views on current issues.”

“We recently joined UIPI because it educates companies about doing business successfully in urban markets, and we encourage companies to take this opportunity to learn more about urban markets regulation,” said Magdalena Padilla, Vice President, Government Affairs & Counsel of the Insurance Council of New Jersey (ICNJ). The ICNJ is a nonprofit, insurance research, information and advocacy organization sponsored by 30 New Jersey licensed property/casualty organizations.

The third national Urban Insurance Advantage workshop will provide life, personal lines, and commercial lines insurers with the tools they need to compete successfully in the urban marketplace. In addition to the regulatory affairs session, urban markets specialists will cover current topics in marketing research, product development, performance measurement and building a corporate team.