Chapter 3 - Marketing and Markets

Question 1

4 Stages of the Market Research Process

Answer 1

Identify the problem/issue and the questions to answer: when should a new package be introduced?
Determine which sources are available and establish a research approach: large amount of data vs small, focused sample.
Design the research method, including form of study, data collecting method, and means of sampling.
Collect and compile data.

Question 2

Michael Porter’s Five Forces

Answer 2

Supplier Power
Barriers to Entry
Threat of Substitutes
Buyer Power
Rivalry

Question 3

The 4 Cs

Common management technique

Answer 3

Company
Context
Customers
Competitors

Question 4

Three Major Buyer’s Markets

Answer 4

Consumer
Commercial
Government/Institutional

Question 5

Vendor Analysis

Answer 5

The process of selecting suppliers by comparing them based on clearly identified criteria. Provides basis for discussions between brokerage and insurer, ensures choices are made objectively, rather than subjectively.

Question 6

Vendor Analysis
Selecting Insurers
Criteria

Answer 6

Solvency/Financial Stability
Underwriting rules and flexibility 
Type of business written
Claims service
Other policyholder services

Question 7

Vendor Analysis
Selecting Brokers
Criteria

Answer 7

Numbers of brokers in a given geographical area
Location and appearance of brokerage
Financial stability
Type, mix, and loss experience of the book of business
What other insurers are represented
Personnel
Brokerage’s business plan

Question 8

Sales vs Marketing

Answer 8

Sales concentrates on company’s need to exchange products/services for cash by converting interest into real purchases.
Marketing supports this with promotion, research, and product development based on input from customer and marketplace.

Question 9

Three Parts/Elements of a Marketing Plan

Answer 9

An assessment of the current situation.
A strategy for the coming year.
Studying the financial and resource implications of the strategy.

Question 10

Marketing Plan

Answer 10

A formal, written strategy that details the current situation, setting out the guidelines for objectives, the marketing actions, and the resource allocations over the planning period for either an existing or a proposed product or service.

Question 11

Market Research

Answer 11

Market research is the systematic gathering of information about a market’s size and trends. To understand a brokerage’s current situation and customers, its management needs a clear picture of its markets. The market research process comprises stages similar to those of other formal problem-solving structures:

Question 12

Market Segmentation

Three Types

Answer 12

Demographic
Geographic
Behavioural

Question 13

Company

Answer 13

internal resources, capabilities, and strategies

Question 14

Context

Answer 14

the environmental context, including the PEST trends

Question 15

Customers

Answer 15

the needs, wants, and characteristics of current and potential customers

Question 16

Competitors

Answer 16

the strengths and weaknesses of competitors and the competitive environment

Question 17

Wholesalers

Answer 17

Brokers who specialize in placing business for other brokers.

Question 18

Lloyds

Answer 18

Only Lloyd’s brokers can place risks in the Lloyd’s market. Unique underwriting, increased risk types.

Question 19

Captives

Answer 19

A closely-held insurance company owned by one or more groups known as parents, whose purpose was and may still be to insure risks of its shareholders or affiliates.

Question 20

Reciprocals

Answer 20

Pools where a number of businesses or non-profit organizations pool their risks and premiums. (school board, municipalities, group benefits)