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Homeowner New Services Case Summary

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To offer a new service that had the potential to cannibalize one of our current offerings, plus there were regulatory issues to overcome. Background: The company provided a service for homeowners and then provided them a warranty that the homeowner could maintain by paying an annual fee. You could compare the warranty fee to your homeowners insurance; as long as you maintain your annual premium you were covered. It’s like insurance, but because we provided an initial service and yearly inspection, state insurance laws did not regulate us. New Offering: To offer an annual warranty that did not require an initial treatment. Not requiring the initial treatment made the new service more of an insurance product, versus a guarantee of performance. This new warranty contract has never been offered in this industry before, and we had significant challenges to bring this to market. Discuss the time and quality factors that influenced the decision: We did not have time or quality concerns, however, we had reputational and regulatory issues that were significant. Would any of the formal methods described in this course be appropriate to use in making this decision? Yes Why or why not? Tools used: Bayesian Analysis, Financial/Forecast Analysis …show more content…

70% of customers bought our service due to a current problem, and 30% bought as a preventive measure. So we new the new offering had the potential to reduce full sales on this 30%. Also, we knew that only 40% of households use the service our industry provides, so we had significant upside potential to gain market penetration/share. Thru the above mention tools, we were able to successfully model the financial impact of this new service line before moving to the next stage in the rollout

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