Uncovering Implicit Consumer Needs for Determining Explicit Product Positioning: Growing Prudential Annuities' Variable Annuity Sales

A variable annuity is a popular product for investing retirement income. However, thousands of similar‐looking variable annuity products are being offered by hundreds of financial service companies. In such a scenario, how can Prudential achieve meaningful product differentiation to increase the sales of its variable annuities? The solution led to the development and implementation of the ‘Emotion Quotient’ (EQ) Tool. The EQ Tool enabled Prudential to redefine its marketing and sales approach along a proactive (as opposed to responsive) market orientation paradigm. This was accomplished by first using the EQ Tool to uncover and quantify the prevalence of certain emotions (such as fear and regret) in the prospective consumer and then pitching relevant variable annuity product(s) that could mitigate the specific behavioral risk corresponding to the prevalent emotion(s). This approach, which was backed by extensive research (as described in this study), enabled Prudential to gain over $450 million lift in variable annuity sales and contributed to consumer welfare by promoting awareness of behavioral risk to investors who are within five years of their retirement. This research study illustrates how industry can collaborate with academia to successfully apply marketing science to solve real‐world business problems.