MARKETING REPORT: Measuring Customer Preferences

Executive Summary
The marketing department will give detailed information on how to effectively introduce our
new Student Health Insurance service for the firm by identifying the features that customers
prefer most. The process requires us to collect and deconstruct data from the target customer
base, which will enable us to utilise the most optimal marketing strategy to achieve our firms
business objectives. The following report will:
Identify a gap in the market and discuss who the target market will be
Outline the key features of the financial product and discuss selected product bundles
Extrapolate the survey responses for the study and consider any implications
Evaluate the design process and interpret the most preferred features to adopt
Target Customer Needs
The study is for our new Student Health Insurance product that we aim to introduce for 2015.
The initial target market is ANU students, where sporting injuries and other everyday accidents
requiring immediate health services are frequent, leading to higher expenditure. The target
market may expand, dependent upon the initial launchs level of success. The firm identified a
gap in the market, as insurance funds are currently not geared towards students and results in
potential being wasted. Therefore, it can be considered a beneficial allocation of resources, but to
ensure its success, the marketing strategy will rely upon conjoint analysis of product features to
position the insurance product for specific segments within the market around income, lifestyle
and current degree.
Product Features & Study Design
The 3 key attributes of the product that we wanted to study and gather insight on are the monthly
risk premium amounts, the different processing requirements & speed in qualifying for our
insurance policy and the max excess amount (see Figure 1). These are vital factors that can help
differentiate us from other competitors who are less concerned with price sensitivity and
smoother customer care. In constructing this design, we used industry benchmarks for the pricing
amounts, whilst the processing speed introduced three unique levels. By doing this, we could
augment conventional pricings by offering greater customer convenience. The bundles chosen
(see Figure 2) not only took into consideration optimal pricing combinations, but also linked
pricing amounts with any additional risk that is taken on board, as medical tests are skipped in
order to boost administration speeds. Thus, each bundle of levels looks to optimise profit and
growth by offsetting any added risk. See Appendix 1 (i) for possible design improvements.
Findings & Recommendations
The survey data gathered from a small sample size of 15 ANU students representing our broader
target market indicate unique trade-offs. The most well rated product bundle on average was
Bundle 8, whilst the least liked was Bundle 1 (see Appendix 2 (I)(i)). Bundle 8 had attribute
levels of phone processing, $300 max excess and the highest premium of $185. In addition to
this, the responses from each customer as they rated the nine bundles showed a clear upward
trend when the feature of phone processing was given. Interpreting the data with respect to the
target market, it is clear that ANU students value a health insurance policy that is simple and
easy to set-up above the other two attributes. Furthermore, with Bundle 1 the most unpopular,
there is clearly more emphasis placed upon the max excess rather than the monthly premium.
With students leading busy lifestyles, there is greater demand for a more stream-lined approach
to health insurance that is both simple to set-up and faster when processing claims. They also
value a lower excess cap over a lower premium as their short term solvency is often at risk in
unforeseeable circumstances, whilst being easier to budget for monthly premium fees. This is
clearly only the preliminary stage of data collection for introducing this new product, and is by
no means conclusive. However, based upon this, it would be recommended to position the
product as a simple and reliable insurance policy that also reduces the burden of hospital
admission fees. The details in Appendix 2 (I)(ii) can be used to further differentiate the service
amongst the different segments (e.g by offering low prices & online for lower income students).
Appendix 1: Study Design Process
Figure 1: Conjoint Study Design
Attributes Level 1 Level 2 Level 3
Monthly Premium $135 $160 $185
Processing
Requirements
By Phone
(Immediately)
Online Documents (24 hrs) Full Medical/Tests (7
day process)
Excess Cap $250 $300 $400

Figure 2: Bundles
Attribute Bundle 1 Bundle
2
Bundle
3
Bundle 4 Bundle 5 Bundle 6 Bundle 7 Bundle 8 Bundle
9
Premium $135 $135 $135 $160 $160 $160 $185 $185 $185
Processing Full
Medical
Full
Med
Online

Full Med Online Phone Online

Phone Phone
Excess
Cap
$300 $250 $400 $250 $300 $400 $250 $300 $400

(i) Improving the study design
A greater sample size may help to add clarity and eliminate the effect of lazy survey respondents
who affect the holistic data. Additionally, using a rating scale of 1-100 may give a more concrete
basis for customer preferences, but may be affected by conservative ratings as well as
exemplifying the effect of any outliers to the data. Overall, this is a sound design using
appropriate attributes and levels to achieve better market insight.


Appendix 2: Customer Survey Responses
I. Summary of Survey Responses
(i) Ratings for each Bundle
15 ANU students were surveyed*, using a 1-10 scale.
*Students were given the following definition for excess cap: maximum amount payable for
each hospital admission by student, after which the fund will cover fees (i.e. lower cap = cheaper
for customer)
*Basic descriptions of: phone (now), online (24h) and full medical (1 week) were outlined
*The average rating is calculated below and determines the ranking order

Bundle 1: {4, 6, 4, 5, 2, 5, 3, 7, 3, 5, 6, 2, 6, 5, 4}; Avg: 4.47 (Rank 9)
Bundle 2: {8, 6, 4, 6, 7, 5, 5, 7, 6, 8, 7, 5, 6, 6, 5}; Avg: 6.07 (Rank 7)
Bundle 3: {3, 7, 6, 8, 5, 7, 5, 8, 6, 8, 7, 5, 6, 4, 7}; Avg: 6.13 (Rank 6)
Bundle 4: {6, 3, 4, 6, 5, 3, 4, 5, 4, 7, 5, 5, 4, 6, 5}; Avg: 4.8 (Rank 8)
Bundle 5: {9, 7, 6, 8, 7, 7, 6, 8, 8, 9, 5, 6, 7, 8, 7}; Avg: 7.20 (Rank 3)
Bundle 6: {5, 8, 9, 9, 8, 7, 8, 9, 8, 10, 8, 9, 8, 6, 8}; Avg: 8.00 (Rank 2)
Bundle 7: {8, 6, 7, 8, 7, 3, 7, 4, 7, 9, 6, 5, 4, 7, 7}; Avg: 6.33 (Rank 5)
Bundle 8: {8, 7, 10, 9, 5, 9, 8, 9, 9, 10, 8, 8, 6, 7, 9}; Avg: 8.13 (Rank 1)
Bundle 9: {4, 6, 8, 9, 7, 5, 7, 7, 8, 9, 7, 6, 6, 5, 8}; Avg: 6.80 (Rank 4)


(ii) Customer Details
Data is based on survey responses from 15 ANU students
Income:
Less than 14% earn $2,000 or more per month
Approximately 37% earn less than $1,000 per month
The large majority of 50% earn between $1000 to $2000 monthly

Course/Degree:
6 students were combined Law undergraduates
3 students were Arts & Literature undergraduates
3 students were Medical Science undergraduates
2 students were Business postgraduates
1 student was Environmental Studies undergraduate

Lifestyle:
60% answered that they were moderately active (sporting & exercise)
20% answered they were very active (athletic and frequent)
20% answered they were mainly sedentary (seated & unfit)
Most answered that they were moderately active, whilst equal