Chapter 6

Question 1

Define “marketing.”

Answer 1

Marketing is a system of business activities which are designed to plan, promote, price and distribute want-satisfying products, services and ideas to target markets in order to achieve the objectives of both the consumer and the company.

Question 2

Identify the four “P’s” used in Marketing.

Answer 2

Price
Product
Promotion
Place

Question 3

Identify the three stages of marketing development and briefly explain each.

Answer 3

i) Marketing as a Toolkit
Using the right mix of the four “P’s” of marketing will guarantee client satisfaction
ii) Marketing as Strategy
Company determines what market to serve, clients to do business with then and develops strategies to attract and retain clients
iii) Marketing a Culture
Everyone who works with a company and everything the company does is focused on clients and satisfying their needs

Question 4

Marketing as a Toolkit – explain the “toolkit” view of marketing.

Answer 4

When companies have a great product at a great price, customers will beat a path to their door

Question 5

Strategic Marketing embodies three fundamental strategies. Explain.

Answer 5

Segmentation – Determining which client segments a company wishes to do business with
Differentiation – Doing things differently from competitors to provide clients with reasons to do business with them instead of competitors
Positioning – Determining image of company and the place it wants to occupy in the marketplace

Question 6

Insurance has had to be marketed differently than other consumer products due to its “intangible” characteristics. Explain.

Answer 6

Clients cannot see, touch, feel or taste insurance. Clients purchase insurance but have nothing to show from this purchase. When clients are fortunate, they will never have to see how well their insurance works.

Question 7

What is included in the “product” component of brokerages’ marketing mix?

Answer 7

Product line to sell, services surrounding core product, brands to sell and how product will be bundled

Question 8

Describe brokerages’ “price” component.

Answer 8

Base price, credit terms, fees and commission reductions are all part of a brokerage’s price component

Question 9

What considerations should brokerages review when developing their “place” component?

Answer 9

Brokerages should consider location of office, hours of operation, 24 hour emergency access, existence of call center operations and internet presence

Question 10

What are two types of advertising brokerages could use when developing their “promotion” component? Also, describe each.

Answer 10

Promotional Advertising – This is advertising to generate the sale of a specific product

Corporate Advertising – This is advertising to create a positive image of a brokerage

Question 11

Why do many brokerages undertake public relations activities?

Answer 11

Public relations activities help brokerage to earn acceptance and confidence of public

Question 12

Describe positioning and differential advantage.

Answer 12

Positioning advantage considers image of brokerage perceived by public

Differential advantage deals with activities, products and features of company that are different from that of their competitors and important to clients.

Question 13

Explain the three components of a “marketing action plan.”

Answer 13

Marketing action plans should include:
Financial schedules – planned sales, expenses, profits and required resources must be measured to track financial success of marketing plan

Timetable – schedule of planned marketing events must be outlined
Evaluation procedures – determining effectiveness of marketing plan requires constant attention of key people to determine if modifications are required.

Question 14

Define “market segment.”

Answer 14

Market segment is the sub-market of total market made up of clients who have similar needs and wants

Question 15

Define “market segmentation.”

Answer 15

Market segmentation is the process of dividing the total market into sub markets

Question 16

Market segments are generally based on certain characteristics. Identify four of these.

Answer 16

i) Demographics
ii) Geographic
iii) Psychographics
iv) Behavioral variables

Question 17

Explain why relationship variables must be considered when segmenting clients.

Answer 17

Some clients may not wish to have a close relationship with brokerages. Spending resources trying to develop relationships with these clients may well be wasted resources

Question 18

Define “target market.”

Answer 18

Target markets are the segments of the total market brokerages wish to concentrate on for specific marketing efforts

Question 19

What are “three” principles that should be used in selecting target market segments?

Answer 19

i) The target market selected should be compatible with goals of brokerage
ii) The target market selected should be compatible with the image of brokerage
iii) The brokerage resources must be able to meet needs of target market selected

Question 20

Identify the four basic strategies used to develop target market strategies. Briefly describe each.

Answer 20

Undifferentiated – This is when a company uses the same marketing mix for entire market
ii) Differentiated – This is when a company uses a different marketing mix for each target market identified
iii) Niche Marketing – This is when a company directs all of its marketing efforts to one target market
iv) Customized Marketing – This is when a company develops a different marketing mix for each client approached

Question 21

There are seven steps to the sales approach. List these steps.

Answer 21

i) Prospect and qualify
ii) Set objectives
iii) Make the initial contact
iv) Probe for needs
v) Present the proposal
vi) Overcome objections and close
vii) Follow up

Question 22

Identify the six steps a purchaser goes through when buying a product/service.

Answer 22

i) Problem recognition
ii) Identify and analyze solutions
iii) Identify sources
iv) Compare and decide
v) Make the purchase
vi) Evaluation

Question 23

What are the benefits of measuring the sales performance from the client/prospect’s viewpoint?

Answer 23

i) Brokers can focus on activities important to clients
ii) Clients appreciate being contacted and asked their opinion
iii) Training can be customized for brokers who are not meeting certain client needs and wants

Question 24

If the producer is viewed as the product, identify the five elements that the producer must project to the client.

Answer 24

i) Attitude
ii) Appearance
iii) Knowledge
iv) Motivation
v) Commitment