For a recent client in the insurance industry, for example, TCG's team developed an optimized pricing strategy for a range of new product offerings around the respective strategic roles each product would play in the overall portfolio.

As discussed in our prior mailings, the team initially leveraged Cambridge's Consumer Demand Analysis^TM methodology to define the new product offerings that would address consumers' unmet needs in the category. The team investigated a wide range of potential features and benefits that could be incorporated into new insurance offers, and ultimately identified the handful that were both highly motivating to target consumers (highly relevant and highly differentiated from existing competitive offerings) as well as highly profitable for the client to deliver.

Once the core features of the product were identified – no premium increase if not at fault, good driver deductible reduction and 50% deductible savings via certified repair network – the team also identified a range of additional profitable features to incorporate into the offerings to increase the product appeal to target consumer segments. The new products were defined as follows.

Based on the product economics and potential for growth, it was clear that Offering C would play the Fuel Strategic Growth Engine role, Offering B the Build High Potential Categories role and Offering A that of a Protect and Maintain role. With the roles clearly defined, the team then leveraged the Consumer Demand Analysis^TM methodology to determine precisely what price points optimized results for the client's range of new products. Importantly, in developing the optimized pricing strategy the team not only sought to maximize product volume, but also incorporated their understanding of the client's cost to deliver the identified benefits to ensure maximum profitability was achieved. Ultimately, the optimized pricing strategy created a clear portfolio of offers aligned to specific segments of demand with a compelling trade-up logic.

For this client, The Cambridge Group's unique approach to merging demand and supply insights through the Consumer Decision Analysis^TM methodology enabled the team's decisive action and pricing precision in a way that had not previously been possible...and all at a time when the client was about ready to accept commodity product pricing as the best that could be realized.

Since the execution of the revised strategy, the company has realized an incremental $2+ billion in premiums and $125+ million in incremental gross underwriting profit annually. Even in the current recession, the revised strategy continues to pay dividends. Acquisition and retention rates continue to be much higher than previously, costs are much lower and optimized product offers continue to command a price premium in the market.