Market Sizing Analysis

Nicole Gyan

Rocio Haskell

Fernanda Leao

Amit Rana

Janani Sundararajan

Karen Williams

Hispanic Market for Dental Insurance in Florida

2

Agenda

• Overview• Problem Statement• NAICS and Other Government Sources• Top-Down Approach• Bottom-Up Approach• Targeted Market• Triangulation• PESTLE Analysis• Porter Five Forces Analysis• Conclusion

3

Overview

• 1954 – dentists formed dental service organizations in California, Oregon

and Washington

• 1966 – creation of Delta Dental Plans Association to coordinate dental

benefits programs for customers with employees in multiple states

• Today Delta Dental is the largest and most experienced dental benefits

carrier in the US – covers more than 59.5 million people

• Coverage plans for individuals, families and seniors

• Plans additionally available through DeltaCare USA, AARP, Costco,

TRICARE and others

4

Problem Statement

Determine the marketing budget Delta Dental would require to capture 15% of the Hispanic dental insurance market in Florida

5

NAICS and Other Government Sources

Health insurance coverage (Florida)

Percentage of Hispanics

Hispanic contribution to

healthAverage health

insurance premiumObjective

marketAverage dental insurance cost Market size

$21,900,000,000 23.20% $5,080,800,000.00 $2,000 2,540,400 $554 $1,407,381,600

• NAICS Codes - 524114

Sources:• http://

www.flains.org/fact-book-othermenu-38/916-health-insurance/733-blue-cross-floridas-largest-health-insurer-humana-aetna-among-other-top-carriers.html

• http://quickfacts.census.gov/qfd/states/12000.html• http://finance.yahoo.com/news/How-Much-Does-Health-iw-1773357078.html

6

Top-Down Approach

Input Process           Output

Hispanic population in Florida

(General market)

Factor 1 (Population in Florida

with health insurance

Factor 2 (People with

health insurance who have

dental insurance)

People who have dental insurance

People who do not have

dental insurance

Objective market

Average dental

insurance cost Market size

4,253,000 0.65 0.724 2001462 762988 2764450 $554 $1,531,505,300

• Delta Dental has 33% of the market captured

Sources:• Pew Research Hispanic Center: Demographic Profile of Hispanics in Florida, 2010• Pew Research Hispanic Center: Demographic Profile of Hispanics in Florida, 2010• Center for Disease Control and Prevention. NCHS Data Brief: Dental Insurance for persons under 65 years with

private health insurance 2008• Dental in Depth, Delta Dental Publications, April 2009

7

Bottom-Up Approach

Assumption:• Uninsured Hispanics in

Florida are not included in our analysis

Market surveyed:• Business to consumer • Business to business

8

Bottom-Up Approach: Target Market

Final target market determinations are made up of the following four segments:

44%

34%

28%

35%

Hispanic employees not offered insurance

Hispanic employees who do not accept health in-surance

Hispanic employees who do accept dental insur-ance

Hispanic market under the age of 18 and above 65 who are unemployed

9

Bottom-Up Approach: Model

Sources:• http://www.bls.gov/lau/table14full10.pdf• http://factfinder2.census.gov/

Total Hispanic population in Florida 4253000

Under 17 (26.3% of total Hispanic

population)

Above 65 with no income (8.7% of

total Hispanic market)

Unemployed uninsured

market (not considered)

Number employed

(18 and above)

Insurance % offered

Offered (Nos.)

Insurance %

accepted

Accepted/health

insurance (Nos.)

Hispanic population in Florida 1118539 372806 1035655 1726000 56.40% 973464 66% 642486

Dental insurance

% accepted

Dental insuranc

e accepted

(Nos.)

Insurance not offered

by employer

(43%)

Number of employees

who do not accept insurance

(34%)

Number of employees who do not

accept dental

insurance (28%)

Target market (total

employed market and

under 17 and above 65 category)

Total target market in

dollar value

Cost of one dental

policy per year

Hispanic population in Florida

72% 462590 752536 330978 179896 3217345 $1,782,409,130 $554

10

Bottom-Up Approach: Occupational Breakdown

11

Bottom-Up Approach: Model

Sources:• http://www.bls.gov/lau/table14full10.pdf• http://www.census.gov/prod/2013pubs/p70-134.pdf• http://www.nclr.org/images/uploads/pages/Florida%20State%20Profile.pdf

Target market value - $1,782,409,130Total Hispanic market 4,253,000

No. of Hispanic employed workers (Above the age of 18) 1,726,000

Cost of one dental policy per year

Occupation Category

% of Hispanic

employedNumber of employees

Insurance % offered

Offered (Nos.)

Insurance not offered

(%)

Insurance not offered

numberInsurance %

accepted

Accepted/health

insurance (Nos.)

Insurance not accepted

(%)

Insurance accepted

(Nos.)

Dental Insurance %

accepted

Dental insurance accepted

(Nos.)

Dental insurance

not accepted

Dental insurance accepted

Total targeted Hispanic market $554

Management and professional 19% 327940 89% 293178 11% 34762 77% 225161 23% 68017 72% 162116 28% 63045 327940 $181,678,760

Service 27% 466020 61% 284738 39% 181282 55% 156606 45% 128132 72% 112756 28% 43850 466020 $258,175,080

Sales and office jobs 21% 362460 78% 281269 22% 81191 65% 181981 35% 99288 72% 131026 28% 50955 362460 $200,802,840

Natural resources, construction, and maintenance jobs 16% 276160 67% 185303 33% 90857 75% 138978 25% 46326 72% 100064 28% 38914 276160 $152,992,640

Production, transportation, and material-moving occupations 17% 293420 77% 224466 24% 68954 72% 161616 28% 62851 72% 116363 28% 45252 293420 $162,554,680

Population under the age of 17 and unemployed above the age of 65 35% 1491345 - - - - - - - - - - - - 1491345 $826,205,130

3217345 $1,782,409,130

12

Triangulation

Market Size (Top-down) Market Size (Bottom-up)Market Size

(Government sources)Triangulation (Estimated

market size)

$ 1,531,505,300 $ 1,782,409,130 $ 1,407,381,600 $ 1,573,765,343

Size of 15% of market to be captured Marketing budget (5% of target)

$ 236,064,802 $ 11,803,240

• Hence the budget justified to capture 15% of the market is $11,803,240

13

PESTLE Analysis

POLITICAL

Lobbying for who gets to provide dental care, and at what price

• American Dental Association PAC spends millions on bipartisan lobbying

• Continued ability of industry to set own prices depends on lobbyists

• Limits number of providers by lobbying against “dental therapists”

• Likely to continue in future – savvy, well-funded, organized

14

PESTLE Analysis

ECONOMIC

Industry hurt by recession, but growth anticipated

• U.S. employment to grow 1.8% over next 5 years

• Disposable incomes to rise at rate of 2% over next 5 years

• Rapid price increases in healthcare prompting purchase of private

coverage

15

PESTLE Analysis

SOCIAL• Persistence of language and cultural barriers

• Increasing openness to community outreach efforts seeking to improve

dental care knowledge

• More online business activity, but preference for face-to-face interaction

• Tendency to be brand loyal and share positive experiences with family

and friends

16

PESTLE Analysis

TECHNOLOGICAL• Lower cost insurance options as a result of widespread internet usage

• Mobility

• Telematics

• Social media

• Distribution channel management

17

PESTLE Analysis

LEGAL

Increasing levels of industry regulation

Federal level:

• Affordable Care Act

• HIPAA (Health Insurance Portability & Accountability Act)

State level:

• Licensing of insurers

• Privacy legislation

18

PESTLE Analysis

ENVIRONMENTAL

Slightly higher cost of doing business

• Increased concern regarding management of toxic dental waste

• Increased importance of Corporate Sustainability programs

19

Porter Five Forces Analysis

THREAT OF NEW ENTRANTS 

Mature market, low threat level for larger companies due to these factors:

• More resources to provide competitive pricing and more services

• Bargaining power with healthcare providers and service networks

• Established brand image

Potential threat:

• Companies offering cheaper alternatives to dental care insurance

coverage to customers whose employers do not grant such benefits

20

Porter Five Forces Analysis

INTENSITY OF RIVALRY FROM EXISTING COMPETITORS• Internal competition is medium and increasing

• Players compete on basis of policy pricing, level and quality of service and

reputation

13.90%

7.70%

3.80%

Delta Dental

Aetna Inc.

United Concordia Companies Inc.

Market share of major dental insurance companies in the US, 2012

21

Porter Five Forces Analysis

PRESSURE FROM SUBSTITUTE PRODUCTS• Discount Dental Plans via networks of dentists and dental specialists – no

deductibles, no annual limits, no high premiums

• Direct Reimbursement (DR) Plans - no attachment to set network of

dentists or dental specialists

22

Porter Five Forces Analysis

BARGAINING POWER OF BUYERS

Low because of these factors:

• Limited number of networks within which most dental insurance

companies exist

• Ongoing need for dental services

• General lack of understanding of intricacies of insurance terms

• Growing number of baby boomers with need for dental care

23

Porter Five Forces Analysis

BARGAINING POWER OF SUPPLIERS• Larger established companies have more power than dental care

providers because of the following:

expansive network of dentists

more widely recognized brand

overhead efficiencies

24

Conclusion

• Florida’s Hispanic community is a worthwhile target market segment for

dental insurance providers

• Delta Dental remains a solid industry player in the US

• Delta Dental is well-positioned to continue its business and marketing efforts

within Florida’s Hispanic community

• Delta Dental should pursue the Hispanic market in Florida with a budget of

$11,803,240