Current Marketing Trends in AAMI Car Insurance - Case Study Example

Current marketing trends in the AAMI Car Insurance Executive summary This advertising report addresses vital issues surrounding advertising of car insurance product at AAMI insurance firm. The advertising report recognizes the unique selling points that can be utilized by the firm to gain a competitive advantage over its competitors. The advertising campaign report gives a recommended strategy that can be utilized to successful advertising the car insurance product to the middle class. These audiences are technological savvy and using digital marketing techniques that are oriented towards this direct is essential. Justification for the recommended strategy is also conferred. Rationale has been given to affirm why the strategy is workable for the Insurance product. The recommended target audience, budget and timing give additional information of the digital marketing campaign of the insurance product. The report ends with a conclusion highlighting vital issues that a successful advertising campaign has to consist of. Table of Contents Executive summary 1 Introduction 2 AAMI Insurance USPs 3 AAMI Insurance USPs acknowledges the importance of being well placed during different stages of a potential customer’s purchase funnel. As such, they make use of search-based digital advertising to differentiate themselves from other manufacturers and identify with potential consumers as experts in the provision of meaningful content at their own convenience. 4 Addressing current needs 4 Recommend strategies 5 Justification of the campaign 6 The target audience 8 Demographics 8 Psychographics 8 Budget and timing 9 Conclusion 10 Introduction The market trends in the insurance industry today have been largely influenced by the change from traditional to emerging markets, which has, in turn, influenced product development, investment and marketing strategies. In addition to a change in growth drivers in the insurance industry, the attitude of the market has also been influenced by societal concerns regarding the environment, material usage, urban congestion, and energy efficiency. Over the years, the business of the insurance industry was focused on simply producing and selling policies. However, insurance providers have now realized the importance of meeting the consumer requirements (Gordon, 2005). In general, the primary trends in the Insurance industry include collaborations; alternatives to policy holders; non-Insurance entrants; involvement of sub-tier supplier’s t become more strategic; increasingly stringent and environmental regulations; influence of social media on marketing; and shifting the competitive landscape (KPMG, 2012). AAMI Insurance USPs Insurance policy providers were among the first businesses to identify and utilize the value of an online presence to attract more clients by developing web sites. Despite their initial reaction, they have fallen behind in using the digital opportunities to reach their clients online by insisting on using offline marketing and managerial systems. The use of digital media and mobile ads came later for the Insurance industry compared to other businesses. Various reports suggest that this industry has just recently begun to take advantage of digital media for marketing its products through print, radio, and direct mail. The same reports suggest that the Insurance industry directs about 40% of its marketing budget to digital advertising every year (Brown, 2003). The past few years have seen a growing trend in policy marketing involving reaching out to consumers during different stages of the purchase funnel. For instance, in the first quarter of 2012, Insurance providers rolled out brand awareness campaigns with the view to reaching about 25% of policy buyers at the research stage. Like other businesses, insurance providers are using mobile ads to maintain their market presence and produce leads that contribute to additional sales (Gordon, 2005). AAMI Insurance USPs acknowledges the importance of being well placed during different stages of a potential customer’s purchase funnel. As such, they make use of search-based digital advertising to differentiate themselves from other manufacturers and identify with potential consumers as experts in the provision of meaningful content at their own convenience. Addressing current needs As mentioned above, policy providers have changed their focus to emerging markets where the demand for new insurance policies is significantly high. The primary need for various policies is a combination of the satisfaction of the transformational need, and as a status symbol. However, these needs are not as easy to satisfy for mature markets, compared to emerging ones. As such, various companies are exploring marketing strategies for mature markets that involve a subscription service that allows consumers to select policies that they need at the moment, without requiring ownership (Brown, 2003). Basically, policy providers will strive to improve their primary competencies. However, their biggest risk on the supply base lies with the subtler suppliers, who lack product diversification. Moreover, their operations are governed by the price of the policy. To counter this challenge, some OEMs are collaborating with companies outside the Insurance industry, such as local governments and utilities, in order to develop the requisite infrastructure and enabling technologies that are capable of supporting marketing of various insurance policies. Recommend strategies As discussed above, there are multiple digital avenues that AAMI Insurance can use to reach potential buyers. However, the success of a digital marketing plan is dependent on the strategy and content used when communicating to the audience. The trends mentioned above reveal the significance of digital interactions in influencing the shopping experience. It is necessary for marketers to employ a holistic approach that implements the variety of digital tools such as posting videos on a personalized YouTube channel, taking part in print and video care reviews, using innovative mobile applications, and placing website banners strategically to fully benefit from the digital era. This should be done systematically in order to save on channel costs, as well as the expenditure directed towards customer relationship management (CRM) and loyalty programs (Barnes & James, 2001). AAMI Insurance can benefit from digital marketing trends by conducting a survey of the market using the CDJ framework. The reduced role of the AAMI Insurance dealer at the point of policy purchase means that AAMI Insurance should focus on ensuring that consumers can attain all the necessary information that they need to make a decision on digital tools. This translates to additional spending on digital marketing compared to traditional means, with the view of facilitating the shopping experience. This does not, however, imply that the traditional marketing strategies should be abandoned. On the contrary, AAMI Insurance should innovate on providing a dealer-customer interaction through digital means, whereby consumers can present their recommendations to them in online dialogue. Effective marketing strategies should involve effective and efficient integration of online and offline communication strategies, whereby redundant means are halted, and their funding redirected to meaningful marketing activities. Digital marketing should be closely monitored to ensure that each customer segment is provided with sufficient funding according to its relevance to consumer purchasing behavior. The Insurance industry has been reluctant about fully tapping into the numerous opportunities presented by digital marketing. Given the impact and savings of using digital tolls in increasing sales, AAMI Insurance should rethink their marketing strategies in this digital age. Justification of the campaign According to Brown (2003), a study conducted on close to 10,000 new policy holders revealed that digital opportunities increase the consumer’s premium perception, which translates to their willingness to buy. The study showed that potential new policy buyers were most influenced by a live experience, followed by a digital experience, which reflects the importance of AAMI Insurance to enhance their online presence as a way to complement their traditional marketing strategies such as product and retail experience (Brown, 2003). The advantages of using a digital value chain in business operations are apparent, even for the Insurance industry. Some of the benefits of digital tools in this industry include transformation and modernization of the retail operations, advancements in product development, and the development of new leads, among others. It is necessary for the AAMI Insurance to acknowledge the vital role that digital channels play in enhancing the consumer decision journey. This refers to the process that a consumer goes through before parting with money to purchase an item for the first time, and subsequent times. Digital tools are necessary in every step of the purchasing journey, which starts with awareness and ends with repurchase. The stages that lie in between include the initial consideration, short listing, purchase, and servicing. Digital tools facilitate the consumer journey through means such as examining the available brands on websites, reading their reviews, and checking for comments on social networks and community forums. The relevance of an online presence is emphasized by reports that claim that more than half of Insurance policy buyers make their decisions online (Brondmo & Hans, 2000). The reliance of consumers on online identification of products and decision making implies that digital communities play a vital role in influencing the preferences of Insurance policy buyers. Social networks such as twitter and facebook provide potential insurance policy buyers with knowledge of how other policy holders react to certain brands. By studying the online reviews from company websites or community forums, a buyer is able to review the responses provided by the manufacturers with regard to the consumers’ inquiries. This shows the importance of having an active online presence and taking part in discussions in various social networks and communities, as a way to provide beneficial input that guides potential consumers to your dealership (Barnes & James, 2001). This result is emphasized by the emergence of a new kind of customers referred to as ROPO consumers. ROPO stands for research online/purchase offline, which is characterized by multiple activities conducted online by consumers before moving offline to make the actual purchase. The activities that are carried out online include brand comparison, communication through forums and social networks for advisory, and price comparison. Once the consumer is satisfied with the material available on the digital tools, they go offline and use the traditional retail process to make the purchase. The growth of a ROPO consumer landscape is an indication of the considerable confidence on online content to guide purchase decisions, which serves to remind marketers of the requirement for an integrated approach in reaching their potential buyers using multiple channels that are convenient to their customers. A study of the German Insurance industry revealed that more than 80% of the annual policy sales were made offline. Digital sales of policies are more common for old policies, while traditional retail channels are used with new insurance policies, mainly due to the risk involved and the narrow flexibility of the prices. As discussed earlier in market trends in the Insurance industry, the changes in technology have provided a new ground for competition among insurance providers. Research shows that the incorporation of digital products that complement the online lifestyle of consumers in policies increases their loyalty to that brand. The rivalry among the providers of electronics has resulted in numerous alternatives in the devices that are available for the provision of digital content and services. As such, insurance providers are able to identify technologies that can provide external digital experiences to their consumers as a way to attract and maintain clientele. The target audience Demographics Primary Target: Males and Females Aged between 35 – 64 years This target group has been chosen on the basis that these will be able to afford a new vehicle of £22,000. 45+ age groups are more financially secure and thus more likely to be able to afford a new car.’ This is also the group that are most likely to fit the psychographic suited to this car and who will buy new from a franchised dealer (Barnes & James, 2001). Psychographics They have embraced the world and all that it can offer; occasionally this meant doing damage to the environment along the way. Starting a family and raising their children became another part of life’s stresses and joys. However, it did not stop them from working hard in their careers to become successful urbanites. All this hard work has afforded them a good standing in their communities which is equally affluent ( Brondmo & Hans, 2000). The educated middle classes who are financially secure. Post the largest commitments they now have cash to spare and are looking to replace the family car or to add a second car to their driveway. Hence the reason why price is not the biggest motivator in the decision making process. In hitting terminal values such as ‘freedom’ and ‘friendly’ shows how import attitude is to the purchase (Brondmo & Hans, 2000). These are the people that want their voices heard but they are not aggressive in nature. If a car says something about you then this car should scream I am the friendlier face of the future. Being future orientated is what these consumers mindset is. They need not be technology savvy as the technology of the car is only there to assist and increase functionality. Rather, than a complex piece of machinery that needs to be mastered. However, for some they will this car because of its technology will help to elevate their social status (Nassif & Valsan, 2012). Budget and timing A $100,000 budget may not be very proficient and it would be suitable to allocate $145,000 in case the present budget is not sufficient. Digital advertising has to be dynamic and effective as well as running for a substantial time. Timing in advertising is very vital when launching a new product. Thorough preparation is required and any question arising from the product launch has to be tackled. Workshops and trade fairs have to be included in the budget of creating brand awareness. Adequate time has to be allowed between the start of advertising campaign and the launch of the insurance product. The target audience has to be well versed with the product before deciding to buy it or use the services of the AAMI Insurance Company (Barnes & James, 2001). Conclusion Considering that close to $100,000 of AAMI Insurance marketing budget is assigned to digital methods, it is evident that AAMI Insurance have began to appreciate the opportunities presented by digital media, compared to traditional strategies. Reports suggest that the effectiveness of digital media as a marketing strategy and its reduction of marketing expenses will make it the preferred choice of marketing by AAMI Insurance, and will, therefore, get the higher percentage of the marketing budget in future. Following the global recession, AAMI Insurance has begun to change in order to improve on the efficiency of their value chains. One of the trends among insurance providers is collaborations that allow them to share in technologies and distribution channels in both existing and emerging markets (KPMG, 2012). Such efforts should be complemented with modern age marketing strategies in order to ensure profitable and sustainable growth of the AAMI Insurance, as well as financial and operational flexibility. As such, marketers should remain alert of new marketing trends that can impact their businesses is a significant way (Brown, 2003). References Barnes, James G. (2001). Secrets of Customer Relationship Management: It’s all About How You Make Them Feel, NY: McGraw-Hill. Brondmo, Hans P. (2000). The Engaged Customer: The New Rules of Internet Direct Marketing. New York: HarperCollins Publishers. Brown, C. (2003). L ́Oréal to revamp strategy for personalized brand blitz. Precision Marketing 15 (March 21): 3. KPMG. (2012). KPMG’s Global Insurance Executive Survey 2012. KPMG International, 4-52. Nassif, A., & Valsan, A. (2012). Insurance industry mega trends. Autobeat Insider. Gordon, F. (2005). The Impact of Brand Commitment on Loyalty to Retail Service Brands. Canadian Journal of Administrative Sciences 22 (2): 97-110. Read More