Review of Strategies Undertaken by AIG - Essay Example

Review of Strategies Undertaken by AIG 1. Identify and review some of the strategies which the company uses to deal with the difficulties presented by the specific features of financial services marketing Introduction The financial services industry means the companies in an industry which are providing different type of monetary services to the customers and their main objective is to use the monetary sources of the customers most efficiently. The companies offer various types of financial products to the customers like insurance, stock brokerage, merchant banking, factoring, investment banking etc. The industry is intensely competitive. So the companies have to take certain strategies for acquiring customers and retaining the market share. The companies should design the products according to the customer needs and those should be attractive. The researcher is taking American International Group Inc. which is a U.S.A. based company for reviewing their products and strategies. In this paper the researcher is trying to identify the strategies which they use to deal with the difficulties presented by the features of marketing of financial services. The researcher will use the website of AIG and some journals for analyze the strategies of the company. Review of Strategies Undertaken by AIG American International group which is a financial services company constitutes of different business units. These are AIG Bank, AIG Direct, SunAmerica financial group, Chartis insurance, United Guaranty Corporation and International Lease Finance Corporation. The main revenue of the company is from the Chartis insurance which is major name in the global insurance sector. SunAmerica financial group is the other which generates maximum revenue for the AIG group. From this statistics it can be said that the company is mainly focusing on the life insurance, general insurance, wealth management, asset management programs. It can also be said statistics that the major percentage of revenue comes from the casualty and specialty line of business. In any type of industry the companies should design and offer the product or services according to the customer needs. Financial services industry is a volatile industry. During the economic downturn the companies generally don’t profit much from the financial services. The reputation of the companies plays a big role in that situation. If the financial services companies provide the products according to the needs of the customers and build customer loyalty then they will have a competitive edge than their competitors. For having a good percentage of market shares as well as retaining the customers in time of financial downturn a loyal customer base is necessary for the financial services company (The Economist, 2008, p.5-7). The services those are providing by the company should be customized. American General Life and Accident Insurance Company (AGLA), the middle market life insurance and accidental insurance division of SunAmerican financial group provides personal customer service to the small business owners and middle market segment by an effective field force consisting of the full time employees. Chartis is gaining revenue from the personal lines; casualty and speciality sector of insurance which means the company is also focused on the personalized services to the customers (American International Group, 2011, p.8). So it can be said that the company is applying the right strategy i.e. they are providing customized and customer oriented services to their customers which in turn make a loyal base of customers for the company. It would be helpful for the company to retain the market share in time of financial downturn. Segmentation strategy is one of the important strategies that should be addressed by the company management properly. American International Group is a large group constitute of many companies. Every company is providing different type of services and their target market is different. AGLA is providing services to small business owners and middle market consumers, American General Life Companies has targeted to lower and middle market segment. This strategy of the company is certainly diversified the presence in the financial services industry. The other aspect of continuing a business for a long time is the capability of innovation. The companies of American International Group are serving the customer using the innovative products continuously. The other strategy which should be used by the companies is the developing the supply chain. Developing the supply chain means a good relationship with the members of the supply chain and making it efficient. When the market is down, the distributors or other supply chain members would work for the company with which they have a good relationship than the normal companies. The business strategy of Chartis is leveraging the relationships with the members of the whole supply chain. The main revenue generating company is maintaining the process so that they can generate deal with the difficulties which they have to face during the marketing of financial services. The strategy of the company is to broaden the base of the customers. So the company has broadened their presence in domestic market as well as in the international market. The management of the group has targeted the consumers as well as the commercial sector (American International Group, 2011, p.13). By broadening their customer base the company made it sure that they can solve the difficulties which they can face in time of offering the service. As their business is in whole world so they use the innovation of the employees of all over the world as well as their partners in other countries. Conclusion The financial services industry is a volatile industry. During the time of financial downturn the companies in this industry get affected more. So the companies have to make it sure by applying the strategies that they can retain their market position also in the tough times. For that the companies need to have a loyal customer base. The loyal customer base can be gained by providing services according to the customer needs and by providing customized services. American International Group Inc is the company constitute of six business units. Each unit offers different type of services to the customers. Each company is targeting a specific segment of customers and they are also providing personalized service which helps the total group to build a loyal customer base. By using the strategies the AIG group became able to deal with the difficulties while dealing with the specific features of the financial service marketing and thus retain a good market share in the financial services industry. Reference The Economist. (2008). Financial Services Strategies for Growth: Focus on the Customer amid Market Turmoil. [Pdf]. Available at: http://www.sap.com/netherlands/industries/banking/pdf/EUI_Financial_services_strategies_for_growth.pdf. [Accessed on: February 6, 2012]. American International Group. (2011). 2010 Annual Report. [Pdf]. Available at: http://www.aigcorporate.com/investors/AIG_2010_Annual_Report.pdf. [Accessed on: February 6, 2012]. Read More