930 chap 2

Question 1

distribution - client proposition - key points

Answer 1

1. demographics of client market place
2. location of clients
3. specific needs and wants that reflect their characteristics
4. how the products and services respond to the needs and wants or how they need to be adapted to do so
5. how it will be delivered and where from
6. the cost of providing the proposition

Question 2

factors influencing selection of the distribution method

Answer 2

1. COST - each route has diff costs, in consumer marketing, costs are per person eg cost to reach 1000 people.
2. EFFICACY- does the route meet the correct market- eg classic cars not been advertised to women shopping mags
3. IMAGE - does the route match the desired branding - eg large risks directed towards innovation, security, knowledge and not at a light hearted approach
4. RESOURCE- what resources does the firm have, capacity, knowledge, expertise- does the resource match the demands of the channel?

Question 3

segmentation and propositions (most brokers segment their business and propositions in various ways)

Answer 3

1. between private and commercial
2. by class of business
3. by trade sectors
4. by size of client
5. by client proposition

Question 4

broker distribution costs, can include:

Answer 4

1. Branch operations
2. New business staff
3. client staff
4. contact management expense
5. travel and entertainment expense
6. marketing/promotional costs
7. website costs
8. research and development
9. incentives for retention and new business
10. management of payment to AR’s

Question 5

the forces behind consolidation

Answer 5

1. sectors considered to be ex-growth
2. investment needed to increase profitability (integration and consolidation)
3. widespread- cosy or weak management
4. increased buying production - eg better suppliers
5. consolidation provides a firm base for expansion into new areas
6. ambitous management see acquisition as a faster route to growth rather than organic growth

Question 6

typical ways in which broker roles may be seperated

Answer 6

1. program design, broking by one firm, services by another
2. division by territory or class of business
3. risk management services
4. acturial and analytical advice

Question 7

broker networks - broadly 2 types

Answer 7

1. formal alliances of brokers, ‘member firms’
2. businesses formed to provide specific services and access to markets for smaller firms that enable them to compete more effectively