In the late 1980s, Capital Management Corporation undertook a top-to-bottom review of its Direct Response Group, a division that had emphasized the direct marketing of insurance policies using celebrity television ads, mass mailings, and telephone solicitation. Into the early 1980s, the Direct Response Group (DRG) had been highly successful, but by the middle of the decade, its growth was showing signs of stagnation.
This paper will briefly examine how DRG responded to the changes in its business environment, and then expand from that example into a broader examination of the meaning, significance, and effectiveness of the business strategy that has come to be called reengineering.
A number of immediate causes for the stagnation of DRG could be identified (Hammer and Champy, 1994, p. 183). One is that the media environment in which its direct mass marketing operated was changing. The proliferation of cable was increasing the number of television stations available to most viewers; this not only reduced the reach of an ad on any one given station, but fragmented the old three-network mass market into specialized audiences; the demographics of, say, the CNN audience are vastly more different from those of the MTV audience than had formerly been the case as between the networks. The proliferation of direct marketing through the mail increased the volume of "junk mail" in consumers' mailboxes, causing more of it to go directly into the wastepaper basket, unread.
Even more fundamentally, perhaps, the nature of the insurance marketplace was changing. (The following is not stated explicitly in the case study by Hammer and Champy, but can be inferred.) Insurance policies formerly came in a relatively few standardized forms, which could be readily marketed to an undifferentiated mass target audience. But more insurers were entering the marketplace, offering a wider variety of products--even blurring the distinction betwe...