In the modern world of business, companies have to engage in stiff competition to survive in the market. Consequently, it is paramount for a new business to perform an analysis of the existing situation and identify what type of differential advantage its products will have. Thus, the current paper proposes a SWOT analysis for a new insurance company, discusses its leverages and core competencies, as well as describes the sources of its differential advantage and how it will meet the criteria for good differential advantages.
SWOT Analysis
It is possible to provide a SWOT analysis for the new company proposing the new high-deductible health insurance plan, organizing this analysis into a 2×2 table as suggested by Berkowitz (2017). This analysis is provided below, in Table 1.
Table 1. A SWOT Analysis for the New Company.
(Berkowitz, 2017, p. 58).
Leverages and Core Competencies
On the whole, it might be possible to consider the provision of high-deductible, low-premium health insurance to be the core competency of the new company. As for the leverages, the new organization may propose advantageous health insurance plans for couples and families. It is known that currently, one of the competitors offer their customers insurance options with deductibles at the level of $5,000 for singles and $10,000 for couples. The new company may create a similar offer with slightly lower premiums for single persons, while simultaneously proposing insurance plans with similar (slightly lower) premiums, but with deductibles that would be considerably lower than $10,000 for couples. Also, health insurance plans may be proposed for families larger than 2 people.
Source of Differential Advantage
It is pivotal that the new enterprise establishes a differential advantage upon their entry into the market (Qureshi, 2017). Regarding the source of differential advantage for the new insurance company, such a source as the targeted segment may be applied to the current case (Berkowitz, 2017, p. 61). As has been noted above, there are currently no advantageous options for health insurance plans for groups of individuals (couples or families). The currently existing offer for couples (with $10,000 deductibles for 2 people together) is less advantageous than the offer for individuals (with $5,000 deductibles), for each member of a couple should gain personal insurance because it would be easier to exceed the threshold of $5,000 than that of $10,000. Also, it seems that no specific offers exist for families of 3 and more people. Consequently, the new insurance plans need to be targeted at couples and families.
The Criteria for a Good Differential Advantage
As for the criteria for a good differential advantage, Berkowitz (2017) mentions four of these: importance, being perceived by the buyer, uniqueness, and sustainability (p. 59). Regarding the first criterion, it should be observed that the proposed differential advantage will be important to the buyer. This is because customers will obtain significant advantages about deductibles when purchasing insurance for couples or families: they will be able to buy insurance for several individuals, thus economizing on premiums, and they will also get lower deductibles.
The second criterion, being perceived by the buyer, should be met without any trouble, for any information or advertisement of the new health insurance policies can easily explain that these policies are advantageous for groups of people, and it will be easy for clients to understand that this is so because realizing this requires no specific knowledge. The third criterion, the uniqueness of the service, is also accounted for because it is apparent that the insurance companies that currently exist in the target market do not propose any specific type of service for couples or families of 3 and more persons. When it comes to the last, fourth criterion, the proposed differential advantage may be sustainable in the market if the competitors do not specifically attempt to retaliate and propose better offers. However, it appears unlikely that they do so, for the new organization is planned to occupy a niche in the market that is currently utilized by no one.
Conclusion
All in all, it should be stressed that according to the provided analysis, the new company might have an opportunity to propose high-deductible, low-premium health insurance policies that would be of benefit for couples and families larger than 3 people. This will provide the new organization with a differential advantage in the targeted segment. It should also be pointed out that the said differential advantage appears to meet all the four main criteria for a good differential advantage as listed by Berkowitz (2017, p. 59).
References
Berkowitz, E. N. (2017). Essentials of health care marketing (4th ed.). Burlington, MA: Jones & Bartlett Learning.
Qureshi, I. H. (2017). Marketing assets: A framework for differential advantage. Asian Journal of Management, 8(2), 220-228.