Professional Documents
Culture Documents
Managing Channel Conflict Net
Managing Channel Conflict Net
Philip G Scott
Chief Executive
Norwich Union Life
IFA IFA
Multiple Brands V Single Brand
Consumer Awareness
Cost
Market Consolidation
Channel Choices of the Industry Leaders
2000
2000 New
New Business
Business
Company
Company m
m APE
APE IFA
IFA Non-IFA
Non-IFA Growth
Growth
Norwich
Norwich Union
Union 928.8
928.8 Y
Y Y
Y 19.1%
19.1%
Prudential
Prudential 541.3
541.3 Y
Y Y
Y
Standard
Standard Life
Life 534.5
534.5 Y
Y Y
Y
Skandia
Skandia Life
Life 413.6
413.6 Y
Y N
N
Scottish
Scottish Equitable
Equitable 409.0
409.0 Y
Y N
N
AXA
AXA Sun
Sun Life
Life 404.7
404.7 Y
Y Y
Y
Scottish
Scottish Widows
Widows 366.8
366.8 Y
Y Y
Y
Legal
Legal && General
General 365.7
365.7 Y
Y Y
Y ________
________
Market
Market == 0.5%
0.5%
IF A
D irect
A ffin ity
NU Distribution Capabilities
IFA
z
z 35 regions
z
z 300+ consultants
z
z IFA Direct
z
z Strategic Partners
z
z National Accounts
NU Distribution Capabilities
Direct
z
z Direct Financial Services - 325
consultants
z
z Direct Corporate Sales - 40 consultants
z
z Telesales
z
z Estate Agency - 340 branches
NU Distribution Capabilities
Partnerships
z
z 520 consultants
z
z 6 Appointed Representative Building
Societies
z
z 15 Introducer Building Societies
z
z 2 Estate Agencies
NU Distribution Capabilities
Affinities
z
z Tesco Personal Finance
z
z Age Concern
z
z Goldfish
Joint Venture
z Royal Bank of Scotland / NatWest Life
z
Causes of Conflict
Distribution
Charges Costs
Resource
Customer Relationship Management
Different distribution channels
s s s
IFA? NU? Tesco?
The essence of managing channel conflict
is understanding the
Value Chain
Management
Support Services
Proposition Development
Building a Product
Distribution & Admin Costs
Marketing
Costs
Development
Costs
Profit Unit Costs
Fixed costs
Fixed cost are equal Fixed cost
Case Study: Result
z
z If IFAs wish to match execution only
prices, they are able to do so by
reducing their level of commission
z
z Both parties benefit from NU market
leadership achieving economies of
scale and reduced unit costs
Case Study: Strategies Employed to
Manage Potential Conflict
z
z Extensive communication to IFAs through their
consultants and in trade and national press
z
z Tesco referral of clients to IFAs if advice is
required
z
z Ensuring that all distributors of our products
receive the same basic product
z
z Differential pricing allows THEIR decision in
setting the final cost
Channel Conflict is Essential
z
z It results in the best advice and
service for the customer
z
z It allows for flexible propositions
Keys to Success
z
z The key is giving all distributors
the same scope for creating added
value within the transaction to the
customer
z
z Through flexible propositions
allowing differential pricing
Forces Driving Change for Providers
and Distributors
REGULATION
CAT standards, Treasury review
Myners report
Comparative tables
FSA With Profit review
Polarisation Phase 2
CONSUMERS TECHNOLOGY
80%
Direct Remote Banks
70%
Banks
Banks
60% Multi-tie
50%
Multi-tied -
40% IFA Former IFA &
30% tied advisers
IFA
20%
10% Independent
0%
1999 Post Polarisation
Progressive Product Strategies
z
z Stakeholder market positioning
z
z Flexible Products to meet consumer focus
z
z Investment Choice and SRIs
z
z Impact of Mutual Funds
z
z Non-traditional products
z
z Corporate market and EBC strategy
z
z Transparency and open architecture
z
z Phase 1 SALTR accreditation
z
z E-products
Progressive Marketing Strategies
z
z Leading brand
z
z Reduced unit costs
z
z Economies of size and scale
z
z Increased distribution capability
z
z Increased segmentation
z
z Tailored propositions
StrategiesM for Channel Diversification
anaging C hannelC onflicts
Q
Q Partnerships