LONDON INSURANCE MARKET

London Insurance Market

Abstract

Despite the proven benefits of an extended service business, most manufacturing companies find it extremely difficult to increase service revenues successfully. An extensive benchmarking project was conducted with a variety of firms in order to gain a better understanding of success factors aimed at increasing service revenue in manufacturing companies. By reviewing the first benchmarking findings with companies that struggled to achieve a high level of service revenue, additional insight into how service revenue is influenced by the success factors was gained. This paper attempts to provide a better understanding of the necessary changes in a firm's activities, London Insurance Marketal structure and culture, and to demonstrate the impact of these factors on service revenue increases. The findings have some clear limitations. The main focus was on the German and Swiss machinery equipment manufacturing industries, and remarks are limited to these sectors. However, it is recommended applying the findings to other industry sectors which are confronted with similar problems. The analysis and conclusions have significant implications for both researchers and managers. For service management theorists, this paper suggests that increasing service revenue in manufacturing companies is influenced strongly by several factors. All factors seem to be the right triggers for increasing service revenues in the desired manner. Monitoring these success factors and gaining an understanding of their impact, provides some guidance for managers seeking to create strong growth in service revenue. This paper offers practical help to achieve high service revenues in manufacturing companies.

Table of Content

Abstractii

Table of Contentiii

INTRODUCTION1

Rationale1

Problem Statement1

Theoretical Framework1

Objectives2

Significance3

LITERATURE REVIEW4

Theoretical justification15

Operationalisation of the pilot phase16

Change management and internal communication16

METHODOLOGY21

Research method21

DISCUSSION23

Success factors for achieving high service revenues23

Empirical findings23

Implementing the success factors26

Market-oriented service development and clearly defined service development process26

Service offering focusing on the value proposition to the customer27

Relationship marketing28

Definition of a service strategy29

Separate service London Insurance Market30

Establishing a service culture31

CONCLUSION34

References36

INTRODUCTION

Rationale

Manufacturing companies are attempting increasingly to exploit the value of services by extending their service business. The rationale for extending the service business proceeds along three lines: financial, marketing and strategic opportunities. The substantial potential revenue, higher margins and fact that services are a more stable source of revenue, represent the financial benefit (VDMA, 1998). Substantial revenue can be generated from a high installed based of products with a long life cycle (Potts, 1988).

Problem Statement

Services provided for the installed base, in general, have higher margins than products (Anderson et al., 1997; VDMA 1998). Marketing opportunities can be understood as “better services for selling more products” (Mathe and Shapiro, 1993, p. 33). Finally, there are strategic arguments such as competitive strategy based on services (Anderson and Narus, 1995). By virtue of being more labor dependent, services are much more difficult to imitate than products. Owing to intangibility, the development of new services usually takes significantly less time (50 percent less than manufactured goods, according to a recent study (Griffin, 1997)).

Theoretical Framework

Furthermore, because clients often use service provider identity and reputation as a proxy when evaluating new services, past successes at new service offerings can play an important ...