One effective way of starting the product development process is by focusing on three types of audit: the customer audit, the internal audit and the market audit.
The prospective customers are the motor insurance clients and home owners with no home insurance. The preferences of customers are these features: competitively-priced, accidental damage cover, theft, fire damage, legal expenses cover and public liability. They prefer a "no forms to be completed" claims system or easy settlement and claims system. They also want a monthly payment system with no extra charges from the insurance company. They also want an insurance coverage with no wear and tear reduction charges.
PGI has the finances to invest in a home insurance business. Its profitable operations will be able to fund the new product of home insurance. PGI has the men to carry out the expansion. There are many individual brokers of PGI who can be tapped to offer these same services. PGI already has the marketing system in place for the motor insurance business.
The UK Home Insurance industry is poised for higher growth. Michael Porter's Five Forces analysis can be applied to the home insurance industry. (Refer to Figure 1: Porter's Five Forces Model). First, there is a rise of independent households as a result of the increasing divorce rate and the rise of single-parent households. The intensity of the industry rivalry among the market players is moderate, hence, there is still a possibility for new market entrants like PGI. The bargaining power of buyers is also moderate. The bargaining power of suppliers is moderate as they enhance the product features of their insurance product. The threat of the new entrants to the household insurance business is very high. The threat of substitutes is very low as there are no substitutes.
a.) The preferences of customers are home insurance policies which offer these features: competitively-priced, accidental damage cover, theft, fire damage, legal expenses cover and public liability. They also prefer a "no forms to be completed" claims system or any other easy settlement and claims system. They also want a monthly payment system with no extra charges from the insurance company. They also want an insurance coverage with no wear and tear reduction charges. They want to purchase from a group. They also prefer a no claims discount from the insurance brokers. They also want to be the one to buy the product that needs to be replaced instead of the insurance company buying the product for replacement. They prefer a customer service representative to handle their calls for inquiry, technical assistance or more information instead of a voice recorded telephone answering system by of the insurance company. The customers get information about home insurance policies from the internet company websites, television, their local banks, the daily news, their existing local insurance brokers and their motor insurance company.
b) The best way to promote to these customers is to go through three marketing channels: the internet, the local insurance brokers and the banks. The company can establish a website. They can partner with existing local insurance brokers for motor insurance. The PGI can also partner with a British bank reach a wider market for this new product.
I. Situational analysis audit and