You are now the Chief Marketing Officer of a brand-new insurer in Hong Kong. As approaching to its 1-year birthday, a new product initiative and marketing program are agreed to launch in the next six

1. To bridge the gap between production and consumption 2. To help complete transactions and fulfill the completed transactions B. Others:

1. Market study 2. Promotion of product 3. Creating contacts of prospective buyers and maintaining liaison with existing ones 4. Understanding the customer’s needs and adjusting the offer accordingly 5. Negotiate price and other offers related to the product as per the customer demand Introduction to Distribution Functions of Various Channels Distribution Channel Function (e.g. A1, B2 etc.) Tied individual agent Corporate/ company agent Broker Bank Direct Online/ digital Others Insurance Channel Distribution Environment Corporate and marketing strategies Company products and target segments Market share and market mix Corporate and Marketing Strategies – Key Components of Corporate Strategy Visioning – High -level direction of the organization Objective Setting – High -level (sometimes still rather abstract) objectives (3 to 5 years) Allocation of Resources – Efficient allocation of human and capital resources Strategic Trade -offs (Prioritization) – Arriving at the optimal strategic mix Insurance Channel Distribution Environment 3 Levels of Strategy Corporate Strategy Business Strategy (Senior management level to formulate abstract into practical strategic goals) Functional Strategy (e.g. Distribution and Marketing) Corporate and Marketing Strategies 3 Levels of Strategy (example) Corporate Strategy Ø To become one of the most well -known life insurer in Hong Kong! Business Strategy Ø To become top 5 life insurer in 5 years! Functional Strategy Ø To achieve APE HK$100 billion in the year of 2026! Corporate and Marketing Strategies CASE STUDY European giant in 2013 “Group strategy and vision for 2015” Problem: Loss in positions of market cap & ROE Vision: Reshaped approach to maximize value creation Group’s new strategy Ø Focus on core business Ø Stronger capital position and disciplined balance sheet management Ø Customer centric approach Ø Technical, operational and distribution excellence Case Study (1) Group’s new distribution strategy Ø Enhance multi -channel distribution Ø Leverage on direct channel expertise Ø Enhance current bancassurance cooperation Ø Tied agent excellence Case Study (1) Local insurer in 2016 Corporate strategies Ø Value creation Ø Expense Ø Solvency Ø Shareholder’s dividend Business strategies Ø Focus on profitability Ø Gain operating efficiency Ø Meet IA requirements, balance ability to withstand ST volatility and ROC Ø Conversion of value to cash – key indication Case Study (2) Functional strategies Ø Drivers of profitability Ø Growth of operating profit Ø APE sales growth Ø Product mix and profitability contribution by distribution channel Ø Budget of product mix Case Study (2) SWOT Analysis S trengths W eaknesses O pportunities T hreats Corporate and Marketing Strategies HOW IS YOUR AGENCY’S SWOT? HOW IS YOUR INSURER’S SWOT? Insurance Channel Distribution Environment Corporate and marketing strategies Company products and target segments Market share and market mix Company Products According to IA, life insurance include “long term insurance” and “linked long term insurance”. Under IIQE papers, they are divided into two groups, traditional and non -traditional. Ø Traditional: Term, endowment, whole -of -life Ø Non -traditional: Universal life, ILAS Under statistics, they are divided into “non - linked” and “linked” Insurance Channel Distribution Environment Non - linked Business (2019 – Q1 2021) 2019 2020 Q1 2021 SPx10%+RP SPx10%+RP SPx10%+RP Rank Name of Insurer (HK$'000) (HK$'000) (HK$'000) 1 China Life 24,550,289 13,897,151 4,437,112 2 BOC LIFE 13,752,177 11,344,838 3,968,845 3 HSBC Life 17,715,472 11,599,365 3,544,387 4 TPLHK 5,998,533 5,213,810 1,378,891 5 AIA International 17,162,286 6,990,403 1,373,532 6 Manulife (Int'l) 5,893,061 4,991,160 1,217,099 7 BEA Life 2,431,881 2,426,534 1,209,175 8 Hang Seng Insurance 4,456,103 3,092,273 1,104,030 9 Prudential (HK) Life 15,877,929 6,018,957 1,101,217 10 FWD Life (Bermuda) 3,267,616 2,697,304 776,698 11 AXA China (Bermuda) 3,578,815 1,621,450 492,589 12 Sun Life Hong Kong 1,906,099 2,372,836 422,146 13 FTLife 1,895,233 1,559,262 420,107 14 Hong Kong Life 556,068 435,895 257,434 15 Fubon Life Hong Kong 1,543,321 324,887 243,821 16 YF LIFE 1,415,901 876,774 171,581 Non - linked Business (2019 – Q1 2021) 2019 2020 Q1 2021 SPx10%+RP SPx10%+RP SPx10%+RP Rank Name of Insurer (HK$'000) (HK$'000) (HK$'000) 17 HKMC Annuity 163,083 253,793 88,796 18 Chubb Life 521,743 287,265 63,252 19 Well Link Life 33,189 212,357 49,647 20 Generali Life (HK) 195,965 237,910 37,191 21 Blue 4,310 65,330 17,806 22 CIGNA Worldwide Life 52,012 64,253 14,070 23 Bowtie Life 56 8,733 5,772 24 Transamerica Life (Bermuda) 171,166 33,270 3,182 25 TLIC 1,731,660 805,560 2,626 26 ZA Insure 0 6,821 2,413 27 AXA China (HK) 169 3,328 752 28 Liberty Int'l 1,212 995 348 29 Pacific Life 1,739 1,537 345 30 Zurich Life Insurance (HK) 0 273 185 31 Heng An Standard Life Asia 0 215 37 Market Total 125,378,888 77,518,984 22,405,112 Linked Business (2019 – Q1 2021) 2019 2020 Q1 2021 SPx10%+RP SPx10%+RP SPx10%+RP Rank Name of Insurer (HK$'000) (HK$'000) (HK$'000) 1 Manulife (Int'l) 604,029 709,582 311,527 2 AIA International 502,501 570,428 286,406 3 AXA China (Bermuda) 227,512 247,779 91,219 4 FTLife 177,791 246,796 78,261 5 Sun Life Hong Kong 56,596 92,899 67,418 6 Quilter International 51,788 45,717 14,880 7 SJPI(HK)L 50,764 35,888 12,601 8 FWD Life (Bermuda) 30,356 34,202 9,700 9 Prudential (HK) Life 7,237 17,211 7,067 10 Zurich International 27,522 18,806 5,651 11 Chubb Life 1,686 4,802 4,488 12 YF LIFE 3,518 5,299 2,803 13 Heng An Standard Life Asia 6,622 10,091 2,449 14 AXA Wealth Mgt (HK) 7,932 12,482 550 15 TLIC 35 83 209 16 CIGNA Worldwide Life 1,129 782 164 Market Total 1,778,933 2,066,166 895,391 Product Type QDAP? VHIS? Coupon? ROP? 大 U 、細 U ? PPLI? ILQDAP? Questions on Company “Product” Product Strategy Flexible withdrawal? Buy term invest the rest? Legacy planning? Mini - trust? With trust? Tax planning? Premium financing? Life settlement? Defining Target Market Identify customer needs Segment total market Profile target customer segment(s) Research and validate market opportunity Target Segment Target Segment Regular or single premium Regular or prepaid premium Origins of customers Premium term Policy currency Protection or savings oriented Product function Others … Product and Target Segment Product and Target Segment Product Target Segment Product/Market Expansion Grid Product and Target Segment Any innovative product idea to new/ existing market identified? Any product (mix) initiative to new/ existing market identified? Product and Target Segment Innovation/ Initiative New/ Existing Market Insurance Channel Distribution Environment Corporate and marketing strategies Company products and target segments Market share and market mix BCG Matrix Market Growth vs. Relative Market Share 4 quadrants of Strategic Business Unit (“SBU”) Market Share and Market Mix Four types of SBUs:

Ø Stars: high -growth, high -share business or product requiring heavy investment to finance rapid growth. They will eventually turn into cash cows. Ø Cash cows: low -growth, high -share business or product that is established, and successful SBU requiring less investment to maintain market share. Market Share and Market Mix Four types of SBUs (cont’d):

Ø Question marks: low -share business unit in high -growth market requiring a lot of cash to hold their share. Ø Dogs: low -growth, low -share business or product that may generate enough cash to maintain itself but do not promise to be large sources of cash. Market Share and Market Mix Build Divest Hold Harvest Market Share and Market Mix 4 imperatives:

Ø Accelerate – evaluate the portfolio more often Ø Balance exploration and exploitation – increase number of question mark opportunities and extract values from dogs more rapidly before divesting Ø Select vigorously – leverage all available data when scaling up or divesting Ø Measure and manage experimentation – speed, cost, risk and return Market Share and Market Mix Market Share and Market Mix https://www.bcg.com/about/our -history/growth - share -matrix Value proposition Ø Product line planning Ø Geographical business analysis Ø Customer relationship management Ø Staff recruitment and engagement HOW IS YOUR AGENCY’S PROPOSITION? HOW IS YOUR INSURER’S PROPOSITION? Corporate Strategy and Channel Distribution Marketing channel strategy and role of distribution Marketing channel strategy and marketing mix 1. Trend of Channel Distribution Consolidation Globalization of purchasing Increasing customer emphasis on total value Distributor offerings becoming more sophisticated Distributors expecting more services from insurance companies Marketing Channel Strategy and Role of Distribution 2. Influential Factor Decision relating to channels of distribution involve decisions regarding type of channels, type of inter mediaries, channel strategies, motivation to channel members etc. These decisions are affected by various factors:

Ø Product Characteristics Ø Market Characteristics Ø Middleman Characteristics Ø Insurer Characteristics Ø Environment Considerations Marketing Channel Strategy and Role of Distribution 2. Influential Factor (cont’d) Product Characteristics Ø Nature of the Product Ø Technical Nature of the Product Ø Market Position Market Characteristics Ø Size of the Market Ø Area or the Market Ø Concentration of Buyers Marketing Channel Strategy and Role of Distribution 2. Influential Factor (cont’d) Middlemen Characteristics Ø Availability of Middlemen Ø Competitors’ Channels Ø Type of Middleman Insurer Characteristics Ø Size of the Company Ø Financial Strength of the Company Ø Experience and Ability Environmental Considerations (e.g. COVID -19) Marketing Channel Strategy and Role of Distribution 3. Various Channel Strategies Push Strategy Ø Aiming at other channel members rather than the end consumer. Ø Attempting to entice other channel members to carry its product through trade allowances, pricing policies etc. Marketing Channel Strategy and Role of Distribution 3. Various Channel Strategies Pull Strategy Ø Aiming at the end consumer of a product. Ø Product is pulled through the channel by consumer demand initiated by promotional efforts etc. Marketing Channel Strategy and Role of Distribution 4. Role of Intermediaries Improvement of the efficiency of exchange process. Distribution without the presence of intermediaries becomes more complicated and costly. (True?) A part of indirect channel system and between insurer and consumer, these intermediaries help in:

Ø Promotion Ø Negotiation Ø Payment Ø Information Marketing Channel Strategy and Role of Distribution Marketing Channel Strategy and Marketing Mix F our Cs (Robert F Lauterborn , 1990) Customer solution: what the customer wants and needs Communication: a two -way dialogue with the customer Convenience: an easy process to act or buy Cost: the customer ’s cost to satisfy that want or need Marketing Channel Strategy and Marketing Mix 4 Ps 4 Cs Product Consumer Solution Price Cost Promotion Communication Place Convenience Marketing Channel Strategy and Marketing Mix 4Ps and 4Cs Competitors will exert market pressures using strategies defined by their marketing alternatives. Marketing Channel Strategy and Marketing Mix Exercise: Marketing yourself as a new college graduate in the job market Marketing Channel Strategy and Marketing Mix CASE STUDY A gain: European giant in 2013 “Distribution strategy in Asia” Market overview and trend Ø Market growth, market share and growth driver Ø Existing marketing channel strategy Ø Competitor analysis, product and target segment Existing strategy in Asia Ø Journey to grow Ø Distribution capacity Ø Product portfolio and strategy Case Study Distribution re -strategization Ø Focus on growth Ø Strengthen existing channels Ø Multi -channel platform Ø Global partnership Ø Product strategy Alignment and integration of Group, Asia and local distribution strategy Case Study HOW TO MARKET YOUR INSURER? Day 1 Learning Life insurance distribution channels Functions of distribution Corporate and marketing strategies Company products and target segments Market share and market mix Marketing channel strategy and role of distribution in corporate objectives and strategies Marketing channel strategy and marketing mix Lecture Topics 1 (Jul 9) Introduction to Distribution Insurance Channel Distribution Environment Corporate Strategy and Channel Distribution