AEGON Direct & Affinity Marketing Services - Case Study Example

Name: Tutor: Title: Service Marketing-Company case: AEGON Direct & Affinity Marketing Services (ADAMS) Course: Date: Word Count: 2,955 AEGON Direct & Affinity Marketing Services (ADAMS) Executive Summary Marketing and management of services creates issues and challenges that are not necessarily faced by companies that deal in manufacturing and packaging of goods. The result of a particular service is often intangible. However, the process of offering such a service is considered to be important than the final result of itself. Most companies want to be uniquely identified or become agile and sustainably compete in the service market. This is the reason as to why they invent new ways of marketing services based on new technologies particularly, in those services that are not theoretically recognized. In order to close the gap between the existing marketing theory and the marketing performance or practices of a particular case company, more research is needed. This research analyzes the industry background, describes the nature of the service market and the challenges that AEGON Direct & Affinity Marketing Services (ADAMS) Company faces as a result of the eight generic differences between goods and services. A critical analysis is made to determine how successful the company has been in managing the challenges that it faces and recommendations are made to enable AEGON Company improve and sustainably market its financial services. Introduction AEGON Direct and Affinity Marketing Services (ADAMS) is a direct marketing branch of AEGON, existing as one of the largest life insurance, asset management and pensions companies in the world. The company works in partnership with large organizations that offers Banking, Credit Cards, Insurance as well as Wealth management services. Basically, ADAMS offers direct marketing and strategic services to enable their clients meet their customers’ insurance needs more effectively. In this report, the industry background, a description of the nature of the service market and the challenges that AEGON Direct & Affinity Marketing Services (ADAMS) Company faces as a result of the eight generic differences between goods and services will be considered. The report also involves a critical analysis of how successful the company has been in managing the challenges that it faces and recommendations are made to enable AEGON Company improve and sustainably market its financial services. The report is prepared by Richardson Marketing Consulting-the brilliant services for AEGON Direct & Affinity Marketing Services (ADAMS)-Australia. Industry background Recently, the economic crisis has put greater pressure on retirement systems. As a result, individuals are required to take on more responsibilities to prepare themselves financially for their own retirement. Research shows that financial crisis has created a positive impact by enabling employees to be more aware of their individual responsibility expected of them to prepare for their retirement. The research findings from the AEGON Retirement Readiness Index (ARRI) about increasing personal responsibility reveal that individuals are to a larger extent reacting to the dynamic reality of retirement by accepting the need to continue working beyond the normal retirement age. However, individuals must be advised to change in how they save for their retirement by taking on greater responsibility for ensuring both their financial and retirement security. Individuals need to understand the amount of retirement savings required and how to ensure those savings meet their lifetime needs. Therefore, people should be aware of their expected retirement benefits from employers, government and extra savings needed to maintain their retirement security. This creates an opportunity for future retirees to start saving early and save regularly. ARRI reveals that education and valuable financial information are central to ensuring financial and retirement security (EAGON Retirement Readiness Survey 2012). AEGON ADAMS conducted a research into future models of the financial distribution and advice to investigate what consumers want. The findings of the research show that current system is dominated by various problems such as low financial capability, low trust in the financial industry and exceedingly-complex products. The company believes that the best way to engage consumers and build confidence with financial services is to manage how the industry communicates to them. AEGON ADAMS has also discovered that people seem to be excited and motivated about financial services. Apart from considering it boring and off-putting, they take it a significant part of life. However, regulators in the financial management industry should reconnect with the perception of people about finance (EAGON Retirement Readiness Survey 2012). Describe the market Since the company works in collaboration with insurers to leverage their global actuarial as well as marketing experience to offer their affordable services based on customer value and risk, ADAMS has adopted a Customer Led Product Development approach that incorporates customers’ needs in their product or service development process. In so doing, the company ensures that both the current and future needs of their customers are met. Market segmentation is based on Segment Affinity against Product Selection in accordance with the attitude preference and needs discovery of their customers. Customer Driven Offer Optimization is another approach that ADAMS has adopted to segment its market to offer their services based on customer preference and needs as well as ROI driven culture. On the other hand, brainstorm for product or service concept development is focused on segment affinity. Product testing is based on focus group and fine tune product or service specifications. Generally, ADAMS outsources technical expertise and experience across the world by working collaboratively with their Business Partners and Insurers to design products or services that are more aligned with both the present and future needs of their customers. The company is committed to providing the financial protection which effectively meets their customers’ needs (ADAMS 2011). Company description AEGON Direct and Affinity Marketing Services (ADAMS) is a direct marketing branch of AEGON, existing as one of the largest life insurance, asset management and pensions companies in the world. Since 1998, ADAMS has been providing the financial needs of Australians. The company works in partnership with large organizations that offers Banking, Credit Cards, Insurance as well as Wealth management services. The main objective of partnering with such organizations is to enhance the tailored life insurance services that can meet the dynamic needs of customers. As a result, ADAMS is committed to distributing insurance products and services for their business partners based on their Australian Financial Services license (236657). In ensuring that their clients meet their customers’ needs, the company offers various expertise and services that ranges from innovative product designing to customer satisfaction analytics as well as marketing and claims handling. Thus, ADAMS ensures that their clients meet the financial protections needs of their customers (ADAMS 2011). Competition AEGON’s competitors comprise of companies that are comparable in terms of business, size and geographical availability. The major competitors include Aviva, CNP Assurances, Old Mutual, Standard life as well as Swiss Re and Zurich Financial Services. The challenges the organization faces as a result of the eight generic differences between goods and services -The significant distinction between goods and service is that most service products cannot be inventoried, and this differentiates service marketing from the marketing of goods. This implies that customers can shun away if appropriate pricing, promotion and reservation are not used to foster demand and deal with ops to manage capacity (Lovelock & Wirtz 2007). However, this generic difference seems not to be a great challenge for AEGON Company. This is because in recent years, the global economic crisis has facilitated changes in the retirement systems and shifted various responsibilities to individuals to consider saving and prepare financially for their own retirement. Due to the current economic uncertainty and aging demographics, many societies have been forced to redefine retirement (AEGON Retirement Readiness Survey 2012). -Intangible elements dominate the value creation, and thus it becomes harder to assess a particular service and differentiate it from competitors. It is notable that when ordering services, it becomes hard for the client to justify the result of the services simply because it cannot be seen, tasted, hard, and even felt. Similarly, the client is not sure of the quality of services due to the fact that he or she cannot estimate it physically. This creates performance ambiguity because it is hard to assess accurately the performance of a particular service product (Lovelock & Wirtz 2007). Intangibility is considered as a key factor when determining whether a given offering is a service or not. However, few products are taken to be purely intangible because services have been perceived to be more intangible compared to the manufactured products, while manufactured products are more tangible than services (Alexander 2002). In this case, the fast-food industry has been considered as a good example, while it is seen as a service, it can also present a number tangible components which include food and packaging. Similarly, although cars are classified in the manufacturing sector, they can as well provide intangible services such as transportation. Since services are intangible, it should be noted that customers will always want see the existing tangible cue to direct them recognize the nature of a given service experience (LOW RES 2004). -Operational inputs and outputs vary widely because maintaining quality, consistency and reliability proves to be a hard task in delivering a service product. Therefore, it is difficult to hide customers from the service company’s failures. Due to positive outcomes of advances in technology, healthcare services, environmental as well as socio-economic conditions, people are living longer than it was previously expected. Since most people do not take the responsibility of preparing for their retirement more seriously, this presents a major challenge and opportunity for AEGON ADAMS as a company that offers retirement services (AEGON Retirement Readiness Survey 2012). -In most cases, people are seen as part of a service experience. This means that behavior of service personnel and customers usually affect the satisfaction level of a particular service. However, recruiting and training employees in the service organization to reinforce the idea of quality service delivery would help to overcome this challenge. Based on its 2012 Review, the CEO of AEGON noted that there could be a possibility for their current and future customers to be more selective about the specific companies they operate businesses with. He explained further that such customers will require quality service from their companies, and thus real-time interaction with AEGON will be fundamental. Although this change creates a tremendous opportunity for the company, it requires them to make significant changes in the manner in which they manage their businesses (AEGON Annual Review 2012, p.10). -Generally, it is difficult to visualize and understand services because of the higher risks and uncertainty perceived to be associated with services. It is important to note that educating or encouraging customers on making appropriate choices is one way of increasing demand for those service products that are perceived to be associated with higher risks and uncertainty (Lovelock & Gummesson 2004). The changing pension’s environment is unpredictable. Although the company is aware of the financial risks that their pension plans may be associated with in this era of new accounting rules and strict regulations, Aegon ADAMS is highly affected by the volatile and unpredictable financial markets. People are also living longer than they were previously predicted and this creates a great challenge for the company implementing effectively their pension plans (AEGON Retirement Readiness Index 2012). -Depending on the interaction between customer and service provider, customers may be considered or involved in the co-production and delivery of service products. However, tasks or services that are poorly executed affect the satisfaction level of a particular service product. It is important for the service providers to develop user-friendly facilities and systems as well as offer good support to their customers on services that they deliver to them (Lovelock & Wirtz 2007). From the perspective of expanded mix for the services, it has been noted that services are generally produced and consumed in a simultaneous manner. Therefore, customers are ever present within the service company, interact directly with the company’s personnel as well as considered as part of their service production process (Grove, Fisk & John 2003). With services, it has been observed that the customer is ever present in the service performance. Since the service is often performed up-close and personal, it means that customer is commonly involved its actual performance. Therefore, the customer is readily available and can make special requests that are not necessarily considered as part of the initial agreement. It is important to note that in services, the aspect of quality control is fundamentally controlled by the customer. The customer makes comparison between his or her service experience and the expectations agreed upon before the performance (Alexander 2002). -The distribution of service products can take place via non-physical channels, for instance, electronic channels and voice telecommunications can be used to communicate and promote the available services. Therefore, it is vital for service providers to develop user-friendly and secure websites that can be freely accessed by the existing and potential clients through internet and telephone. This makes it easier for the consumer to determine the possible quality of services by appraising the provider or simply browsing the official web-page of the service company before contacting the provider via email or phone (Lovelock et.al 2004). AEGON Company is one of the service industries that are increasingly facing dramatic changes within their environment, for instance, computerized developments and telecommunications which include the Internet that has facilitated the emergence of the global markets to expand their outputs. The growing competitive nature of the service markets has created a significant trend that leads to both threats and opportunities (AEGON Annual Review 2012). -Normally, the time factor assumes greater importance because it is often believed that time is money. This means that customers will always want a service at their most convenient times. Therefore, it is crucial for service providers create time to compete appropriately on the speed of their service delivery and this could be easily achieved by offering extended hours (Lovelock & Wirtz 2007). Based on the AEGON Retirement Readiness Index (ARRI) Survey on how to increase personal responsibility to save retirement, it can be noted that the company faces a great challenge because individuals are increasingly reacting to the dynamic reality of retirement. A number of people are acknowledging the need to maintain working beyond the normal retirement age. However, it is equally important to make profound changes in how people save for their retirement (AEGON Retirement Readiness Index 2012). A Critical evaluation of how successful the organization has been in managing the challenges AEGON ADAMS offers long-term financial security because it is considered as a new service that has not been more needed. Therefore, AEGON is committed to providing products and services that benefits their customers with long-term financial security by protecting what is considered most valuable to them as well as encourage them to save and make investments for their future. Furthermore, the company provides their customers with products when they retire to enable them manage their assets and resources. AEGON supports the idea that everyone regardless of his or her income, would prefer to retire with dignity and peace of mind. Despite the increased demand for their products and services, AEGON has been required to adapt to highly challenging business conditions while operating in a rapidly changing financial industry. For instance, the initial crisis in 2008 that caused both a decline in the economic growth and the severe budget constraints of U.S and Europe also affected the growth in developing markets. In addition, the company has experienced crisis within the euro zone where the interest rates reduced to the lowest levels causing a major challenge for insurers who offer guaranteed returns. However, AEGON ADAMS has maintained its business model to offer life insurance and pensions services to its customers. The company outsources skills and expertise to develop its products and services for their customers. Although its products and services in particular, life insurance, pensions as well as other long-term investments can take a long as 40 years to mature, they are priced according to their potential risk assessment and other variables, such as shifts within world financial markets, demographic changes and customer behaviors (AEGON Annual Review 2012, p.18). AEGON ADAMS is committed to enhancing customer loyalty by improving in their service levels, currently the company is investing in new distribution. Specifically, AEGON ADAMS is expanding their online presence so as to connect effectively and more frequently with their customers as well as to meet their various financial needs. Since the world’s population is aging, the aging factor puts much pressure on both government and company finances that are required to pay out pensions in long-term as well as on labor force that is needed to support the increasing number of pensioners. Aegon Global Pensions being a dedicated specialist in the global pension provisions helps its clients in designing and implementing international pension strategies for their personal or business needs (AEGON Annual Review 2012). Through its Retirement Readiness Survey, AEGON Company is well-prepared to address comprehensively the barriers to successful retirement planning and readiness. The company perceives retirement as a period of security and being contented, and thus considers it the accumulation of years of dedication and hard work which should make individuals realize broader ambitions. The driving force behind sustainable delivery of financial service at AEGON ADAMS is that the company believes strongly that as individuals live longer and healthier lives, this helps them to retire with a high level of dignity and confidence. This creates new opportunities for people entering their retirement and the entire society (AEGON Retirement Readiness Survey 2012). Recommendations for improvement In order to manage the challenge of intangibility, the marketing manager of AEGON ADAMS Service Company will be required to make the impressions of the company service to reach their clients. This will involve promoting the physical evidence of the company by displaying all tangible and material aspects of AEGON Company through appropriate means to project the desired image. Since it is quite clear that services are inseparable from their service providers, it means that entities involved in the provision of service are part of that particular service. Therefore, due to this simultaneity, the management of AEGON should take into consideration that when their employees make mistakes, their customers will receive poor financial services and this affects the customers negatively (MetoKote Corporation 2011). AEGON should encourage people to take more responsibilities so as to ensure their financial and retirement security. It is important for individuals to be aware of the challenges and opportunities associated with increased longevity. The company should continuously educate its clients to clearly understand the amount of retirement savings required as well as how to utilize those savings meet their need and last their lifetime. In so doing, education will provide them with meaningful financial information regarding how to manage finances and attain retirement security. The financial coach should get people encouraged to be more responsible for their financial planning as well as keep them committed. It is vital for the management of AEGON Company to be aware that distinctive financial advice must be reconsidered so as to build customer confidence (Hurman 2008). Bibliography AEGON Direct & Affinity Marketing Services (ADAMS)-Australia Website: AEGON Annual Review 2012, “Transform Tomorrow: It involves understanding and serving the customer better”, retrieved January 11, 2014 from, AEGON Retirement Readiness Survey Index 2012, “The Changing Face of Retirement and Aging Populations, Pension Reforms and Personal Responsibility”, retrieved January 11, 2014 from, Alexander, J.A. 2002, “Service Marketing Challenge: Ways to defy obstacles and effectively promote your offerings”, retrieved January 11, 2014 from, Grove, S.J., Fisk, R.P & John, J., 2003, ‘The future of services marketing: forecasts from ten services experts’, Journal of Services Marketing, 17, 106–19. Hurman, N., 2008, The future of financial distribution and advice: The importance of listening to consumers, retrieved January 11, 2014 from, LOW RES 2004, Foundations for Services Marketing, McGraw-Hill Highered, retrieved January 11, 2014 from, Lovelock. C & Gummesson, E., 2004, ‘services marketing, In search of a new paradigm and perspectives’, Journal of Services Research 7, pp. 20–41. Lovelock, C.H, Vandermerwe, S, Lewis, B & Fernie, S., 2004, Services Marketing, Edinburgh Business School, Hariot-Watt University. Lovelock, C & Wirtz, J, 2007, A Framework for developing effective Service Marketing Strategies: An Overview of Understanding Customer Needs, Decision Making, Seventh edition, Prentice Hall. MetoKote Corporation 2011, Services marketing as applied to Surface Treatment, MetoKote Brazil. Olga, T, 2009, Marketing Auditing Services, Laurea University of Applied Science, Hyvinkaa. Read More