Innovation, marketing information sharing and new product success in the European insurance sector

Abstract

Most companies the world over are actively participating in the race of investments in the service industry. The main question to solve is what new products and services should offer these companies to remain profitable. Avaílable frameworks aiming at aiding the managerial decision-making process, -as it regards to new products and services design and development, are largely based upon empirical data proceeding from the manufacturing sector. Given that services are different from goods, the expansion of insurance services may require sorne peculiar approaches. Morgan et al. say that the turbulent environment of the eighties, "created the pre-conditíons necessary lor the consumer direct insurance industry to become a laboratory 01 experimentation jor the financial servíces industry". So far, as Stone et al. (1997,354) suggest: "lnsurance companies are now having to manage customer bases where average persistence is substantially lower that it used to be. This means a much stronger jocus on customer retention, customer acquisition, and customer development". This article examines how far the manufacturing oriented frameworks elaborated for the design and development of new products apply to the service sector in general, and to the European insurance industry in particular. European insurance companies operate in a highly volatíle market, so their survival relies upon the identification of the outstanding cornerstones leading to market leadership. For that purpose, insurance firms must design and re-design the essential core elements that will allow them to identify new areas of business and attracting and retaining customer. Drew states that the success and/or faílure of the new product/service development process for service firms are influenced by factors similar to those encountered in industrial firms. Nevertheless, insurance products and services use to have short product life cycles and it is easy to copy them; thus, sorne differences may arise between industrial products and insurance services. It should be also taken into account that the managerial practices of the European Insurance companies may diverge as the companies belong to different countries, deal with different types of insurance premiurns, and achieve diverse performance success levels. So far, it is important to develop an explanatory model that allow both researchers and practitioners to recognise the isolated and conjoint effects of the different variables that affect the success of the New Service Development Process. In this article, we examine how most successful insurance companies, -as it pertains to the quality, frequency, and quantity of successful new services,apply their managerial practices. More particularly, we review the underpinning points between innovation degree, marketing information sharing -as related to managerial practices, new product success and corporate performance. The model is tested applying structural equation modeling techniques to a sample of 113 European Union Insurance firms. We identify the different explanatory relationships, as well as the relative importance of the different analysed variables.