Product innovation and differentiation are key building blocks for successful marketing.

One of the themes at this year’s Life Insurance Conference is product innovation and differentiation in a low interest rate environment. In any industry, there’s a need to innovate and differentiate. Brands that fail to do this risk a loss of relevance in the marketplace; more importantly, they risk negative consequences on the income statement. With life insurance, product offerings tend to be moderately complex. It’s not a product category like racquetballs or chicken wings. However, the relative complexity of the category allows for life insurance brands to create and market products that can broaden the marketplace and establish points of differentiation from one brand to another.

One of the sessions during the conference will be “Reaching the Elusive Middle Market”. I feel that this is a great idea for insurance brands, as the middle market offers some great opportunities. The middle market has been traditionally underserved in the life insurance category, as brands have typically focused efforts on more affluent households. LIMRA defines the middle market as households that have an income between $35,000-$100,000. In 2011, they estimated 35 million middle-market households were underinsured, although half of that group was considering the purchase or expansion of life insurance coverage. When half of people in a potential target market are inclined to view a product offering favorably, that is a terrific first step.

Chief concerns in the middle market are affordability of life insurance and making life insurance a priority purchase. There’s been a perception that life insurance is more costly than it is actually is. For brands, this represents an opportunity to develop marketing communications demonstrating that life insurance is more affordable than initially thought. News to consumers that is better than initially anticipated is always going to be well received. This ties in with making life insurance a priority purchase. Another perception that exists is that the middle market is financially squeezed, a perception that does have economic validity. If you’ve been consuming media from financial news sources (or even general news sources), there has been a lot of negative sentiment coming from the middle market. There have been employment issues, debt issues, housing market issues, etc. Considering the issues, one can understand why many brands have not made the middle market a priority.

It isn’t always good business sense to write off such a large segment of the market. But if there’s going to be an effort to reach an underserved market, it is an idea that will need buy in at all levels of the organization. A well known case of this approach comes from Unilever in the consumer products industry. A number of Unilever brands, particularly in emerging markets globally, have often been targeted towards people lower on the socioeconomic scale. While laundry detergent and life insurance are not entirely analogous product offerings, the corporate mindset issue is one of universal relevance. Some brands in the life insurance space are beginning to see wisdom in the idea of gaining market share in the middle. For example, there are 5 times as many households with incomes between $60,000-$150,000 in the US as households with over $150,000. Penetrating this segment of the market, if done in sizable quantity, has the potential to be financially lucrative for a brand.

In attempts to pursue the middle market, there will be some differences in the marketing approach. Multi-channel marketing (including email and social media marketing) will take on even greater relevance in the middle market. Brands will need to accelerate their abilities to effectively distribute, optimize and manage content across online channels. The brands that communicate their positive attributes of differentiation best across channels position themselves to be the most financially successful.