CHAPTER 2 LITERATURE REVIEW
4.2 INDUSTRY BOUNDARIES
4.3.1 SOURCE OF NEW ENTRANT
4.3.1.1 RELATED PRODUCT MARKETS
It is suggested by Geroski (1999) that related products are those goods and services that customers use together that are produced by firms in the same industry, in other words these may be complementary offerings. Stemming from this it would be useful to ascertain the goods and services that brokers will require with their contracts to sell life and investment products on behalf of service providers.
4.3.1 SOURCE OF NEW ENTRANT
It is suggested that new entrants are likely to come from the following areas (Geroski, 1999)
RELATED PRODUCT MARKETS
FIRMS UP AND DOWN THE VALUE CHAIN
FIRMS WITH RELATED COMPETENCIES Fig.4.2. Source of New Entrant
Source: Porter (1985)
It would be logical to identify firms or players that fall into one or more of these categories
4.3.1.1 RELATED PRODUCT MARKETS
It is suggested by Geroski (1999) that related products are those goods and services that customers use together that are produced by firms in the same industry, in other words these may be complementary offerings. Stemming from this it would be useful to ascertain the goods and services that brokers will require with their contracts to sell life and investment products on behalf of service providers.
A discussion with independent brokers with reference to question one of the questionnaire, revealed that they require marketing information as a complementary service, while training also featured but more specifically brokers indicated that they required training in order to sell the products on behalf of the life or investment company.
There was the requirement of technology products from the life and investment company.
This they argued would complement the high level of service that is demanded of them from the various regulatory bodies that oversee the well being of the consumer in the current environment. In this case it is the Financial Services Board and the Life Offices Association.
This is consistent with the findings from question one of the questionnaire. managers at life assurances companies and investment firms that were surveyed, where 100% of these managers felt that marketing information and training were both necessary complementary services that enabled the brokers to sell the products and services of the life and investment companies. Technology services were also a high priority with the mangers that were surveyed with 77.8% of those surveyed attesting to this.
Marketing Information 100%
Training 100%
Technology Services 77.8%
Source: Table. 4.2 Survey of Broker Managers
Given the above, it is safe to conclude that the important complimentary services required by brokers with their contracts to a product providers offering is marketing material, A discussion with independent brokers with reference to question one of the questionnaire, revealed that they require marketing information as a complementary service, while training also featured but more specifically brokers indicated that they required training in order to sell the products on behalf of the life or investment company.
There was the requirement of technology products from the life and investment company.
This they argued would complement the high level of service that is demanded of them from the various regulatory bodies that oversee the well being of the consumer in the current environment. In this case it is the Financial Services Board and the Life Offices Association.
This is consistent with the findings from question one of the questionnaire. managers at life assurances companies and investment firms that were surveyed, where 100% of these managers felt that marketing information and training were both necessary complementary services that enabled the brokers to sell the products and services of the life and investment companies. Technology services were also a high priority with the mangers that were surveyed with 77.8% of those surveyed attesting to this.
Marketing Information 100%
Training 100%
Technology Services 77.8%
Source: Table. 4.2 Survey of Broker Managers
Given the above, it is safe to conclude that the important complimentary services required by brokers with their contracts to a product providers offering is marketing material,
training and technology services. From this it can be reasonable deduced that a new entrant could come from any of these three areas.
The internal marketing divisions of the various product providers generally produce marketing information. In the general scheme of things this function does not present a huge opportunity to becoming a service provider to the related industry. This stems from that fact that people that lack industry knowledge and experience internally produce all marketing information.
Within the realms of training, development and technology major opportunities present themselves. Trainers and technologists require lots of industry experience in order to function optimally in the life and investment business. These two areas could present a significant threat of entry, as was the case with the ''New Venture Academy" which was setup by former trainers of Liberty Life. They trained managers and recruits for Liberty Life franchises. These franchise are not outsourced distributions, they are merely off site operations in terms of Liberty's growth strategy. They are still funded by the parent company and they must subscribe to the performance criteria as set by Liberty Life. The model being envisaged will operate independently from all Life and Investment companies. Its specific mandate will focus around the distribution of the various companies' products.
By the same token providers of information technology could present a threat as evidenced by the advent of" Adivcenet", an independent provider of financial planning training and technology services. From this it can be reasonable deduced that a new entrant could come from any of these three areas.
The internal marketing divisions of the various product providers generally produce marketing information. In the general scheme of things this function does not present a huge opportunity to becoming a service provider to the related industry. This stems from that fact that people that lack industry knowledge and experience internally produce all marketing information.
Within the realms of training, development and technology major opportunities present themselves. Trainers and technologists require lots of industry experience in order to function optimally in the life and investment business. These two areas could present a significant threat of entry, as was the case with the ''New Venture Academy" which was setup by former trainers of Liberty Life. They trained managers and recruits for Liberty Life franchises. These franchise are not outsourced distributions, they are merely off site operations in terms of Liberty's growth strategy. They are still funded by the parent company and they must subscribe to the performance criteria as set by Liberty Life. The model being envisaged will operate independently from all Life and Investment companies. Its specific mandate will focus around the distribution of the various companies' products.
By the same token providers of information technology could present a threat as evidenced by the advent of" Adivcenet", an independent provider of financial planning
software to the life and investment industry. They have in excess of three thousand clients (3000) intermediaries as clients.
Therefore it may be concluded that the threat of entry posed by from related product markets emanate largely from training companies that provide a service to the life assurance and investment industry. The other impending threat is the developers of information technology systems for this industry.