Marketing of Pure General Insurance Company - Case Study Example

The PGI Company has long been facing hurdles in terms of its competitors, however it boasts of a very huge strength in terms of being very strong in motor insurance. The situational analysis of this company reveals the company’s strengths and weaknesses and examines the potential threats and opportunities it faces by venturing into a new insurance category, house insurance. Interviews of potential customers have also been taken into regard to analyze the situation in a better way. Pure General Insurance Company The business was a joint venture between Andy Purfect and Bill Reeves. This company came into being when Bill’s wife, being member of a club, asked for motor insurance and earnings by sharing a percentage of the commission. The company boasts delivering only motor insurance to the citizens of United Kingdom. The company saw ups and downs when the introduction of Direct Line came crashing into the market and took over it by storm. Their idea was the introduction of a direct insurance concept where the role of a broker was cut short and people could directly go to the insurance companies and make the cheapest deal. This idea was propagated throughout Europe and accepted by all. The company has been able to maintain its position even through these turbulent times and sustain its market. However, they are now thinking of market penetration and adapting a diversification strategy by venturing into house insurance. SITUATIONAL ANALYSIS The company’s situational analysis has been of a prime importance because it is recommended to carry out one when venturing into a new market or diversifying in the old one only. a. Customer audit Customers today have become clever due to constant exposure to the information that is available around the world. They have become intelligent and they never settle for less. They want the best and in search of the best they can spend an enormous amount of time till they get what they want. In terms of customers, one takes two things into consideration. First is if the customer is buying the product for the first time. The second is the condition when a renewal of service or a repurchase of product is taking place. Customers take different considerations before buying a certain product for the first time or for the second time. A survey research shows that customers give more importance to the price the most when they are buying products for the first time. Reputation plays an important role too as customers are willing to pay more for a product known for its quality rather than one which is not known for its compatibility. When it comes to buying to a product they have already brought before or have had an experience with, their considerations change a bit. Service issues top this list which means that the customers feel comfortable with the service of the product. Next comes the price which means in both the cases, price always stays the driving factor for customers. However, it’s interesting to note that product details are not given enough importance when buying a certain product. In term of insurance, customers are looking for a company that offers claims quickly, with a quality service at a cheaper price than others. Also, the company needs to have a good reputation in the market as reputation is serving as one of the leading decisive factors in the buying decision of a customer. Also, the prospective customers when the company ventures into the house insurance will increase and will include around 5.2 million people out of which 4.7 million are employed. Also, inflating prices have also increased the market opportunities as more customers are looking for a better deal than the others. Another way to look at the customer situation is to analyze the economic and social condition they are surviving in. In this way, one thing should be kept into mind that house price inflation is driving customers out of buying a house. Also, increase in cash poor single parents is also decreasing the number of potential customers for the company. b. Internal audit The company has survived turbulent time in the past especially when the Direct Line Insurance came into the market and devastated almost every other company by offering cheaper and quicker insurance than anybody else working then. However, the company took a very important step of not using diversification strategy then. Their motor insurance has become their strength on which they can capitalize now. They have built a reputation of providing quality insurance in a cheap price than many other motor insurance companies and have shown the world their competency in this insurance sector. Therefore, the market will greet them with open arms because they have already made their mark in one field. The customer audit shows that reputations play an important role. Their maintenance of a sound reputation might be the key in providing with the right mix of components needed for success. Another interesting advantage that the company nowadays is owing is the low lapse rate than the industry. The PGI Company’s motor insurance lapse rate is around 12% that is twice as low when compared to the industry average of 28%. This reveals a sound internal system that the company can boast of and primarily can utilize it when venturing into house insurance. The low lapse rate also shows the company’s capability of performing under any circumstances. c. Market Audit The 4p’s of marketing can be used to efficiently conduct a situational analysis when it comes to market auditing. The right mix of product, price, place and promotion can help achieve in a better market share than the competitors. The product should be appealing to the customers when it comes to the price and its quality. The promotion should encompass a proper marketing strategy. The placing of the insurance policies should be done in the right income base as house price inflations might drive our potential customers from insuring their property if the claim system requires very high return. Analyzing the market, one realizes that the age group going for mortgage is increasing at a constant rate as theft against properties are rising and the weather conditions are not very helping too. Porter’s competitive forces can also be used to analyze future threats and opportunities. There might be an increase in house ownership and due to increase in the market prices and inflation, the need for house insurance may increase many folds. They will also have to expand their current product base by offering new variety and in turn will be able to exploit the customer base. Another important factor that will increase the need of house insurance is the aging population. As the population is moving towards the elder age group, there need more assurance that their house will always be there in need. INTERVIEWS Interview 1 Interview 2 Interview 3 Interview 4 Interview 5 Interview 6 Question 1 Customer is influenced by member group (service) Customer more influenced by mortgage lender. Customer ready to buy competitively priced insurance from content group Customer might go for it if requirements are met. Customer ready to buy however worried about insurance after membership expiry. Customer not interested. Question 2 Insurance of portable belongings as well as the house contents Insurance of contents lost due to fire, accidental damage. Insurance of contents lost due to fire, theft and accidental damage. Insurance of contents lost due to fire, theft. Insurance of contents lost due to Fire, theft, accidental damage. Legal expenses coverage too. Insurance of contents lost due to almost everything. Question 3 Accidental, theft, fire coverage. Freedom to choose products after damage. Accidental damage, fire coverage. Also the ‘no form’ claim system. Accidental, theft, fire damage. Easy claim system. Easy installments payment without interest. Fire and theft replacement. Likes the replacement system, doesn’t like going himself to choose. Fire, theft, accidental damage and legal expenses should all be covered. fire , theft, accidental damage, travel insurance, public liability, legal expenses, help lines Question 4 Better interpersonal skills needed in insurers, replacement of replacement product. None Help lines increasing cost. Doesn’t like ‘wear and tear’ reduction. Doesn’t like telephone answering system, more personal touch required. Doesn’t like exclusions. Question 5 Television, newspapers and letters. Television. Internet broker. Primary source-internet ignores others. Some personal sources. Local insurance broker. The summary of the above interviews on the basis of gender and questions might be able to help in analyzing the situation a little better. Generally men from all age groups are willing to employ their content group as their home insurance providers; however, people from the superior age group are more concerned about the particulars and expiry of the insurance. Almost everybody replied that they wanted insurance claim against fire, theft and accidental insurance. On a more general note, people want insurance on almost everything that pertains to a house. The third question covered the components the customers want the insurance to cover; therefore it can serve as a valuable information asset when formulating the mix of insurance offers. The fourth question reveals that men on an average are not fond of the machine-answering system that companies are using these days and would want it changed; women on the other hand are more materialistic and don’t like exclusions like wear and tear reduction in the claim system and want the company to insure the products fully. The target of marketing department should be using communication channels such television, newspaper, and brokers. The focus should be limited to these areas for better marketing. The advice that I would like to put forward is to formulate a wide range of insurance policies that include all the coverage that can be there because customers want the complete coverage as they think that they pay a lot for it during times they don’t set claims. According to the interviews, there is a difference in policy formulation for men and women as there is an evident gap between priorities of the two. There should be an aggressive marketing strategy pertaining to advertising through television, newspapers and internet brokers. Local insurance broker should also not be neglected and taken into confidence. The customer on a majority dislikes the monotonic behavior of insurers and would like better communicators present. An efficient and better claim system will definitely be able to grasp more customer base more than anything. OUTLINE STRATEGY Motor Insurance House Insurance Current Market Should incorporate bonus cards, discounts on new motor insurances and go for a better customer relationship system by removing the old mechanicalone They can offer deals to the already existing customers with more advantages at a lower price. Existing communication channels can be leveraged. More exciting offers for existing motor insurance customers. New Market Motor insurance strategies don’t have to be changed much. The offer can be made cheaper to lure in more customers to the competitor’s customers. The company should go for conglomerate diversification. Venture into new markets to gain customer base by offering better services as the interviews suggested. There is a very evident relationship between the analysis done by the company and the interview results. Both the evaluations are suggesting that the company should venture into the market of house insurance and formulate a diversified strategy that pertains to different age groups and sex. The company should venture into the new market segment and introduce a variety of products that are catering to every age group as each one has different requirements and priorities. The sexual divide also should be kept under consideration while formulating the mix of strategies. Placing a fast, efficient and personal claim system by removing the monotonic machine systems and replacing them with humans will be a great highlight of the new venture too. As it has been discussed earlier that price plays an important role in the buying decision of a customer, therefore the company should price its products carefully targeting the middle class of the economy so that more and more insurances can be taken. Also, research has showed that prospective customers will increase include around 5.2 million people out of which 4.7 million will be employed; therefore, company can gain a lot by providing easier installments the un-employed customer base. They have a reputation in the motor insurance and they should bank on it and use their experience in their market. The company should also use as many advertising opportunities as possible like television, newspapers, internet advertising and take the local broker into confidence the most. This is because the company needs to bank on these brokers to sell the insurance in the most efficient way. Local brokers might be able to provide the company with the required customer base that everybody cannot achieve as they don’t give much importance to brokers these days. Therefore, commission system should be taken into mind in this case and should be kept appealing enough for them to be loyal to the company. Keeping all these strategies in mind, it can develop a sound house insurance policy that will benefit the company. Bibliography Richard L. Daft. Management. Russ Winer. (2007). Framework for marketing management. 3rd Edition. Department of Engineering, Cambridge University. (2007) 4 P’s of Marketing. Available from [Accessed 13 December 2007] Read More