Impact Insurance
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Impact Insurance

Collaborating to translate market segmentation into product design

This blog follows my previous post on Britam’s findings from its market segmentation exercise, which can be found here.

At Britam, we wanted to avoid the all-too-common situation when market research findings are shared in a presentation, and then everyone goes back to business as usual. Therefore, after completing our market segmentation, we experimented with a “bottom-up” product design workshop.

Incorporating insights from market research into business activities is challenging and findings are frequently not fully explored or applied. One of the causes we identified was that research findings were only shared with a limited group of team members, who attempted to implement changes in a “top-down” manner. This affects buy-in from other staff members who are responsible for implementing any changes resulting from the research, such as sales officers.

To prevent such a situation, Britam adopted a collaborative approach, bringing together all microinsurance business stakeholders. This included everyone that was directly affected by the development of new products, such as the sales and marketing departments, the actuaries, and support departments, such as operations, finance, and IT. The research findings were shared in a workshop format and the departmental representatives were then divided into three groups.

Each of the groups, made up of representatives from various department, benefited from a mix of skills. Each group worked through the following tasks:

1. Review the market segmentation findings

2. Prioritize the market segments based on potential, unmet needs, accessibility and business case

3. Identify appropriate products and distribution channels for the prioritized segment

4. Outline an implementation plan to reach the selected segment

All business stakeholders appreciated the “bottom-up” approach to product development and action plans were successfully developed to target selected segments. The following is a summary of one group’s analysis of the “Elementary” segment.

TARGET SEGMENT: “Elementary”

SEGMENT FEATURES: Urban and peri-urban residents, below 35 years of age and with a monthly income of US$ 350 or less. The majority of the individuals in this segment are self-employed and run small businesses as mechanics, shop-keepers, and artisans, among others. The segment was given the name “elementary” as individuals expressed need for basic financial services to support their businesses. These includes payment services through banking agents and insurance products that protect their businesses against fire, theft, water damage, and so on.

SAMPLE CUSTOMER PROFILE: Tabitha, a retailer based in Mombassa city, buys cereals and grains from a large supplier and sells them in her shop. Her daily income is up to US$ 10 and she uses banking agents for her financial transactions. The shop is her only source of income and most of her risks are related to this business.

POTENTIAL PRODUCT: A basic insurance product that protects businesses and stock against fire, theft, water damage, and so on. In order to simplify the administration of the product, the benefit amount can be fixed, instead of linked to an actual loss assessment.

POTENTIAL DISTRIBUTION CHANNEL: Two potential distribution channels were identified. The first was the supplier of stock to the small businesses. This channel can act as an aggregator, reaching many businesses in the same supply chain. Secondly, banking agents could distribute insurance to business owners.

A similar analysis was carried out for each selected segment, and relevant products and channels were identified.

As a result of the success of this workshop, Britam realized that it needed to change its product development process to allow it to build on the prototypes developed.

Keep an eye out for my next blog, in which I will share the new product design process introduced at Britam following the segmentation workshop.

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Saurabh Sharma

Saurabh Sharma

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Expanding new generation insurance business models to reach emerging consumers