1.1 Research Motivation and Background
Nothing is certain but death. Death is a must process that everyone has to face. There is no getting away from the fact that a death in the family causes a great deal of stress and upset. In real life, we tend not to think about funeral planning until after a person has died, and many do not discuss their final wishes with those closest to them. Yet, not doing so places the responsibility to handle such affairs with surviving loved ones who are still trying to accept their loss.
According to Ministry of the Interior’s statistic in 2003（Department of Civil Affairs, Ministry of Interior,2003）, the population of aged people(above 65) are 9.02% of Taiwan’s total population. Compare to WHO’s definition of advanced age society (7% 0f total population), Taiwan has already been an aging society.
As the result of aging society, the Executive Yuan estimate the body count from 2002 to 2050 will be 3 times of 2002’s number, which are 130,000. The funeral expenses per person are around NT$ 376,000 (Department of Social affairs,
Taiwan would around NT$ 50 billion per year. This number will increase through the increasing deceased people and inflation rate.
As the funeral business market is a huge potential market, many funeral homes and big business are eager to enter this market. Some of them introduce pre-need arrangement product concept from the WEST and Japan in 1993, but it didn’t work very well because of the social value to this concept is not popular.
However, people are more open to talk about the dead and will issue in these two years. More and more companies join this market and even have some commercials on TV. On the other hand, the government enacted some policies to the funeral business in 2002, this represents that the government’s concern of the development of this market.
Many consumers have considered arranging their future life, not only for themselves but also for their families. Although there seem some products to choose in the market, they still hesitate to buy because of the following reason:
1. They know little about funeral affairs, so that it is hard to choose the right product for them.
2. They don’t trust funeral homes enough because of the small size, credit, consistency of the funeral homes. They are afraid to pay ahead and finally get nothing.
3. The funeral service business is still not well organized enough. Products don’t have a standard price, service content. Customers may encounter some losses and disadvantages buying this product.
Under this environment, we found that insurance product has similar product concept with the pre-need funeral arrangement, because they both have pre-planning concept and try to minimize some risks in people’s life. As the aging market has been quite concerned by many businesses, some funeral companies try to forge alliance with insurance companies or rest homes to figure out a new integrated product which can link with funeral service to provide a one stop shopping service to the customers in 2003. Even the insurance companies also try to develop more new product related to this booming aging market. This thesis tries to setup a new business model that funeral company ally with insurance product and compare this new product concept with traditional funeral business using 4P model and business process. As the related research is little, this research also gathered some information from either insurers or funeral homes. The research also tries to make a 10 year cost and profit validation for companies or government who are interested in this new financial service development.
1.2 Research Objectives
Customers know little about funeral service and many families encounter financial problems because of dealing with funeral affairs. New business model concept ally with the funeral home can be a trend to provide a better, safer financial service to the customers. This thesis probed into the development of funeral arrangement and insurance products. Furthermore, try to setup a new integrated product and analyze its possibility of success in the market.
From business view, how to maintain long term relationship with customer and earn more business opportunity are key points to a company’s consistency.
This thesis tries to analyze how the new business model provides a better way to maintain long term customer’s relationship and profitability.
As the pre-need funeral issue has been more popular in the market, this thesis provides some information for the government to enact related policy to protect customers’ rights and for business companies to develop better products and services.
1.3 Research Process
1. Through gathering information to understand the development of the products, the background of the market and setup the research structure and methodology.
2. To gather related information from books, periodicals, magazines, newspapers, papers, funeral homes and insurance companies.
3. Setup research structure, hypotheses and new business model design.
4. Analyze the marketing mix of the product by using 4P model.
5. Te probe into the long term customer relationship of this new business model.
6. Identify research object and methodology, and then gather some information for cost & profit validation.
7. Setup some assumptions for analyzing the ten year cost and profit validation.
8. Make conclusions and suggestions.