Study 6: Marketing in Insurance

Question 1

Marketing Campaigns: What is mass marketing? (1)

Answer 1

Aims to reach as many prospective customers as possible, and no particular segment of the population is targeted.

Question 2

Marketing Campaigns: What are the 4 main categories of info about consumers that are likely to help when developing a marketing plan? (4)

DBPL

Answer 2

• Demographics - stats that show characteristics of a population such as age, gender, marital status, family size, income level, geographic location, occupation. (for commercial client, could be industry type, revenue, company size, etc.)
• Buying Behavior - how and when consumer purchase goods and services.
• Psychographics - people’s attitudes and aspiration relating to market research. What makes people buy products
• Location segmentation - where consumers live or work, (for businesses - whether they are local, regional, national, or international)

Question 3

Describe Market Segmentation and its benefits (4)

Answer 3

• Once organization has gather info about a market, it uses market segmentation to break a large group of customers into smaller sections for concentrated marketing efforts.
• Markets are divided into segments of the population with similar needs, and traits.
• Dividing up the market helps identify which segment justifies funding, which has potential for growth, and which ones are not dominated by competitors.
• Policy wordings can be modified to appeal to a particular group of consumers. (Niche market, Ex: antique cars)

Question 4

Why is Policy Retention important? (2)

Answer 4

• Cost of getting a new customer is expensive for brokers (Costs of gathering info, background checks, MVR searches, site inspections, etc.), therefore policy retention is important.
• Renewal costs are much lower and more profitable.

Question 5

Current Situation Assessment: Please define this (1) and what can be done to assess the current market? (2)

Answer 5

• It is the research and analysis of the prevailing trends and conditions of the market.
• One perspective that has worked well is hiring specialists that are knowledgeable that can relate to clients. (Ex: IT specialists to sell insurance to IT companies)
• Clients appreciate speaking to people who understand their business. This is all part of knowing the client.

Question 6

Current Situation Assessment: What is a marketing self audit? (5)

Answer 6

• Process of assessing current situation within a company may include a self-audit.
• Data gathered from current and past initiatives allows company to evaluate their sales by location.
• Reviewing vision and mission statements reassures a company that it is doing what it says it is doing (What company thinks they are providing to customers must match what customer thinks they are buying)
• Conducting a self audit provides an opportunity to Identify what company can improve on.
• Also allows company to Identify competitive advantages it holds and how it differentiates itself.

Question 7

Assessing the Competition: What must insurance companies consider when assessing their competition? (2)

Answer 7

• Consideration is given to how competitors function in the market in terms of size, share, standing, reputation, marketing methods, profitability, and key strengths/weaknesses.
• Must consider not only brokers, but also direct writers, as well as possibility of competition from sources that are not yet unknown.

Question 8

Assessing the Competition: Explain the ripple effect (1) and what influences Mergers and Acquisitions can have on the competition? (2)

Answer 8

-Ripple effect: One companies marketing launch will often be felt by other companies (When new insurer enters market it might act aggressively by offering better terms/products which can affect sales projections of other companies)

• As a result of mergers and acquisitions, insurance companies enter new markets as direct writers or vice versa.
• When insurers leave market, creates market dislocation for existing customers. The remaining insurers must be prepared to examine implications of such a move, it may be an opportunity to grow)

Question 9

What are marketing strategies affected by? (4)

DCIG

Answer 9

• Dominance - organization are classified based on their market share or dominance in the industry
• -Does the organization lead the market?
• -Does the organization challenge the current leader?
• -Or, is the organization a follower?
• Competitive Advantage - Strategies relating to market penetration and an organization’s sustainable competitive advantage including the following:
• -Cost
• -Product or Service Differentiation
• -Market Segmentation
• Innovation - strategies relating to the org’s status with respect to innovation in new products, services, and business model:
• -Pioneering
• -Close follower
• -Late follower
• Growth - Strategies related to achieving the org’s growth:
• -Increasing sales to existing customers
• -Targeting new customers
• -Diversifying the market base
• -Intensifying sales efforts

Question 10

How can insurance companies avoid direct competition with large insurance companies? (1)

Answer 10

By specializing in a smaller niche market.

Question 11

Marketing Objectives: What are the marketing objectives of an insurance company? (4)

Answer 11

• Marketing objectives are the means to achieve sales objectives and address each group within the target market.
• Must be Specific, Measurable, Attainable, Relevant, Time Bound. (SMART)
• By examining past industry sales, Future sales can be estimated.
• Monitoring and analyzing results allows management to respond to the changes in the market

Question 12

Positioning: What are some positioning methods used by insurance companies? (1) and what must be considered related to a products positioning? (1)

Answer 12

• When an organization has expertise in a specific area, or is offering specialized products, it can focus its efforts on specific potential clients. (Ex: Create a niche market with construction contractors - Company may have knowledge in this field which gives them a competitive advantage)
• To consider a products positioning, issues such as its competition, how its perceived, and the needs of desired audience is considered.

Question 13

What is a positioning statement? (3)

Answer 13

• When an analysis of the products position is complete, the company develops a positioning statement that identifies the target market for which the service or product is intended.
• The statement is the foundation of the marketing strategy. It is like a promise the organization must deliver.
• Company must set out goals to support its positioning statement.

Question 14

What is a marketing plan? (2)

Answer 14

• Outlines the actions needed to implement a marketing strategy and maps all marketing activities. (Many companies prepare written report to formalize a marketing strategy)
• Limited by budget and resources available.

Question 15

Related to the marketing plan, what is included in the product or service overview? (1)

Answer 15

-A marketing plan fully descries the product or service and its purpose. An overview of the product or service includes its features, pricing, distribution channels, positioning, and the promotions/advertising that will be used.

Question 16

Product line and services: What must insurers consider when it comes to the product lines and services they offer? (3)

Answer 16

• They must decide whether to underwrite broad range of coverages or narrow its concentration to build expertise.
• Must also consider and be sensitive to new developments in technology, lifestyle, legislation, and societal changes. (This can present new opportunity to develop coverages and services)
• May also consider offering complementary services along with the polices they underwrite. (Loss prevention, consulting, etc.)

Question 17

How are marketing efforts evaluated? (3)

Answer 17

• To determine if marketing efforts are actually generating sales, results must be tracked.
• Surveys may be conducted to find out what customers think.
• Complaints offer a rich bank of data for companies to analyze (provide opportunity for companies to come up with solutions)

Question 18

Promotion Strategy: Define promotion (1) and its purpose/goal. (2) What must insurers recognize when choosing a promotional technique? (1) and what is the budget generally for promotional activities? (1)

Answer 18

• Promotion is an inclusive term incorporating various elements such as personal selling, advertising, sales promotion, publicity and public relations.
• It is undertaken to stimulate demand for products or services.
• Goal is to make consumers aware of the product and encourage them to act.
• To choose the most effective promotional technique, must recognize which approach attracts the chosen target market.
• Budget benchmark may be determined by what others in the industry typically spend.

Question 19

Distribution Strategy: What are the three types of market distribution? (3) *BAD**

What is important about where a product is made available? (1)

Answer 19

• Brokers
• Agents
• Direct

-Where a product is made available says something about the quality and status of the product. (Ex: Exclusive and expensive luxury product will not be sold on the floor of discount store)

Question 20

Distribution Strategy: what is the distributor of a product responsible for? (1)

What are the two target markets for brokers? (1)

Answer 20

• Responsible for determining the customers needs, matching them to the products/services available from an insurer, making sure appropriate contract is issued, and providing ongoing advise to customer.
• Customers and partners (Develop relationships and loyalty with both. Customers are targeted for profitability, and insurers are attracted and retained as strong partners who service client needs)

Question 21

Why is advertising so important? (1) and what are some examples of advertising? (2)

Answer 21

• Advertising messages build awareness of a product and evoke attitudes and actions in a targeted audience.
• Examples include magazines, newspapers, billboards, radio, TV, flyers, internet (Banners, buttons, pop-ups)
• Best publicity is positive word of mouth

Question 22

How does marketing literature offer support to marketing and sales efforts? (2)

Answer 22

• Presents a companies image very clearly.

- Designed to resonate with target audience.

Question 23

News Media Communication: How do companies prepare themselves when dealing with messages conveyed to the public? (4)

Answer 23

• Any message conveyed to public must be structured to demonstrate the interests of the public.
• Positive messages should be prepared in advance to avoid defensive/negative messages.
• Anyone in contact with media should talk plainly, in everyday language. (Business talk can offend public)
• Be prepared with appropriate facts and statistics about the industry.

Question 24

News Media Communication: How can companies prepare themselves when a crisis emerges? (3)

Possible exam question

Answer 24

• Companies usually have a designated person that deals with the media in response to a crisis.
• When a crisis emerges, concerns must be defined using inarguable language.
• Before meeting with the press. at least 3 statements should be prepared to illustrate that company is aware and cares about the situation. These statements may include facts, statistics and any research results that reinforce companies position.

Question 25

Sales promotion and events: Why are sales promotions an important part of marketing? (2)

Answer 25

• Sales promotions have incentives designed to cause the potential customer to act. (Price discount, free gift, etc.)
• Sales promotions will likely succeed if they connect to what customer really want. (They should be fun and make the customer feel like they really have a change to win a prize)

Question 26

Public Relations and Publicity: What are some public relations activities (1) and whys is public relations/publicity important? (4)

Answer 26

-Public relations activity involves evaluating public attitudes, engaging in activities that promote public understanding, and furthering brand recognition.

Are important because they:

• strengthen a brand name
• keep companies name in the spotlight
• Attract good employees and executives, earn respect from investor, reinforce public interest
• Create a positive image (Donations, volunteer at food bank, etc)

Question 27

What does a companies public image refer to? (3)

Answer 27

• A companies public image refers to the way clients perceive it.
• Advertising, community service, and good public relations all contribute to maintaining a good public image.
• Must be integrity in business dealings, and company must demonstrate social responsibility to improve its public image. (Sponsoring events, supporting charities, etc.)

Question 28

Planning Public relations: Why is important to plan the public relations of an industry or company? (3)

Answer 28

• Ensures that what the media sees or hears about the company is controlled and consistent with image plan.
• Corporate announcements, defensive public relations, and marketing public relations are all part of planned public relations.
• Public relations and publicity tools include news releases, feature stories, interviews, forums, online chats, talk shows, etc.

Question 29

Crisis Communication Model: What is the crisis communication model? (6)

possible exam question

Answer 29

• Handles negative, speculative, or controversial questions.
• Tends to have good results when met with public spirited, plain talking message delivered professionally by CEO or designated spokesperson.
• Statements such as “no comment” are rarely advisable as they have negative public reaction.
• Best to arrange interview and determine interview topics and issues in advance. (Allows you to keep control of the exchange)
• The prepared message is the focus. Allows media contact person to establish control over the situation,.
• Communication made during the crucial first hours after an incident must be thought through so that positive publicity can be generated.